22 Jul , 2022 By : Kanchan Joshi
JSW Energy reported strong 1QFY23 results with 135% YoY profit growth, on the back of higher revenues. During the June quarter, its total revenue increased by 68% year-on-year (YoY) to Rs3,115 crore from Rs1,860 crore in first quarter of FY22. The consolidated net worth and consolidated net debt as on June 30, 2022 were Rs16,638 crore and Rs7,720 crore respectively. Renewable Energy (RE) capacity ramp-up is on track.
Jefferies initiated coverage with a Buy rating on JSW Energy shares on 18 July 2022, based on higher RE share in capacity ahead and cash flow benefits from pockets of higher merchant prices and has maintained its Buy rating, for the near and medium term, with a target price of Rs315 (from Rs310).
“JSW Energy was possibly the only major private sector power company that did not bid aggressively in the tariff-based competitive bidding period of 2008-12. The company has kept its B/S intact, with d:e well below 3x and reasonable return ratios. The company owns 70.03 mn shares of JSW Steel, which we have not valued separately," the global brokerage said.
If one excludes the value of this from the company's net worth, the reported ROE will be 11.5-12% vs the 8-10% reported ROE. Jefferies believes the management will maintain the return discipline ahead in bidding, which is the underlying reason for our optimism of growth at healthy return ratios ahead. Though, key risks, as per the brokerage, include delay in execution of projects and aggressive bidding.
Management on its call highlighted that it is on track to meet its 20 GW capacity target by FY30E and is hopeful of advancing its FY25E 10 GW target vs on-ground capacity of 4.8 GW.
“Robust balance sheet position will help them pursue attractive growth opportunities. Also, healthy internal accruals and financial flexibility would support long-term growth," the note stated.
Shares of JSW Energy, a power producing company which is part of India's JSW Group, have declined about 20% in 2022 (YTD) so far.
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