JSW Energy CEO Positive On Fundamentals Even As Stock Loses 25% Value In A Month

Even as JSW Energy Ltd.'s share price lost 25% of its value since the start of this year amid disappointing earnings, the company is fundamentally positive and on track to achieve stated operational goals, according to Chief Executive Officer Sharad Mahendra.

"We are on track to reach 10 GW capacity by March 2025 with current capacity at 8.8 GW as of January," Mahendra, who is also joint managing director of the company, told NDTV Profit on Wednesday.

He attributed the underwhelming December quarter to lower demand, monsoons, and reduced government spending, following a high base last year.

But January has shown higher demand and better tariff discovery, with fundamentals remaining strong and March quarter expected to see improved growth, he said.

Acquisitions of O2 Power Ltd. and KSK Mahanadi Power Co. will help expand capacity to 14 GW by June 2025, according to the top executive. JSW Energy has signed power purchase agreements for over 7 GW of under-construction projects, set for execution within 18-24 months.

A revised strategic roadmap called 'Strategy 3.0' will be released in the first quarter of next fiscal, the CEO said.

Meanwhile, the JSW Group power producer's first battery energy storage project has faced hurdles, with Kolkata-based CESC Ltd. rejecting higher tariffs for a pilot BESS project in August 2022. Despite this, the company expects to have its first operational energy storage capacity by next financial year, Mahendra said.

Poor Quarter

JSW Energy has consistently underperformed, missing street estimates for the sixth consecutive quarter. In the October-December period, revenue declined 4% over last year to Rs 2,438 crore, missing Bloomberg's estimate of Rs 2,958 crore. Net profit dropped 27% to Rs 167.83 crore, significantly missing the Rs 347-crore estimate.

Key challenges included lower power tariffs due to weak demand, higher employee costs and other expenses impacting operating income (Ebitda down 18%), and a weak contribution from new renewable capacity. Additionally, lower plant load factors affected overall generation, while debt rose 6% sequentially to Rs 26,448 crore.

Despite the earnings miss, net power generation rose 10% to 6,571 million units.

JSW Energy Shares Down

JSW Energy share price fell to hit a 10-month-low on Wednesday, tanking as much as 10% intraday, its lower circuit limit, to hit Rs 453.6 apiece.

The stock has fallen 27% on a year-to-date basis. The relative strength index was at 45.

Out of 12 analysts tracking the company, seven maintain a 'buy' rating, three recommend a 'hold' and two suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 42.5%.