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Synopsis : JSW Energy pursues aggressive growth with investments in renewables and storage. Stocks surged 6% on strong Q4 results. Kotak maintains 'SELL,' citing fully priced market. JM Financial bullish, targeting Rs 648.
According to Kotak Institutional Equities, JSW Energy remains committed to an aggressive growth strategy, investing in both thermal and renewable energy assets, as well as storage solutions.
The company's stock surged by 6% during Wednesday's trading session following the announcement of robust financial results for the March quarter and the declaration of a final dividend for FY23. Furthermore, the approval by the company's board to raise funds up to Rs 10,000 crore in one or more tranches also contributed to the stock's gains.
Despite the encouraging plans and execution, Kotak Institutional Equities believes that the current market price adequately reflects all positives, with the stock trading at 31 times FY2026 EPS and 3 times P/BV. Consequently, Kotak maintains its 'SELL' rating on the stock with a revised fair value estimate of Rs 275 per share, up from Rs 235 per share previously.
JSW Energy reported a significant YoY increase in net profit, up by 22.4% to Rs 345.30 crore for the March quarter, with revenue also witnessing a 3.2% YoY growth to Rs 2,755.90 crore. The stock rose by 8.54% on Wednesday, reaching a high of Rs 618 on BSE. Kotak's target implies a potential downside of 56% for the stock.
JM Financial highlighted that JSW Energy's revenue growth was driven by improvements in net generation, which increased by 26% YoY to 6.4 BUs, fueled by renewable energy additions, higher thermal generation, and acquisitions.
During FY24, JSW Energy added or secured greenfield renewable energy capacity of 681MW/3.4GW, bringing the locked-in renewable energy capacity to 13.2 GW, alongside SECI's 250MW/500MWh BESS project.
JM Financial expressed confidence in JSW Energy's ability to achieve its target of 10GW/20GW renewable energy capacity by 2025/2030. They maintain a 'BUY' rating on the stock, with a target price of Rs 648 based on a sum-of-the-parts valuation.
JM Financial values the JSW Energy stock at 11 times FY26 blended EV/Ebitda.
Disclaimer: We provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Related Questions
1. What is JSW Energy's growth strategy according to Kotak Institutional Equities?
JSW Energy remains committed to an aggressive growth strategy, investing in both thermal and renewable energy assets, as well as storage solutions.
2. What factors contributed to the surge in JSW Energy's stock price during Wednesday's trading session?
The surge in JSW Energy's stock price was attributed to robust financial results for the March quarter, the declaration of a final dividend for FY23, and the approval to raise funds up to Rs 10,000 crore by the company's board.
3. What is Kotak Institutional Equities' assessment of JSW Energy's current market price?
Kotak Institutional Equities believes that the current market price adequately reflects all positives, with the stock trading at 31 times FY2026 EPS and 3 times P/BV. Consequently, they maintain a 'SELL' rating on the stock.
4. How much was JSW Energy's net profit and revenue for the March quarter, and what impact did it have on the stock?
JSW Energy reported a significant YoY increase in net profit, up by 22.4% to Rs 345.30 crore for the March quarter, with revenue witnessing a 3.2% YoY growth to Rs 2,755.90 crore. This led to an 8.54% rise in the stock price.
5. What is JM Financial's outlook on JSW Energy's renewable energy capacity targets?
JM Financial expressed confidence in JSW Energy's ability to achieve its target of 10GW/20GW renewable energy capacity by 2025/2030. They maintain a 'BUY' rating on the stock, with a target price of Rs 648 based on a sum-of-the-parts valuation.
