JSW Energy Ltd. is planning to fast-track its planned investment of $12 billion to achieve the target of 20 gigawatts in total capacity a couple of years in advance, with officials exuding confidence that the Rs 5,000 crore raised through the qualified-institutional-placement route would be a great enabler in accelerating the growth.
The power company, which said the fundraise via QIP was the largest in the power sector, had earlier planned to achieve the 10-GW capacity by the current financial year and 20 GW by fiscal 2030. But it is hopeful of achieving the target early due to the strong order book of over 9 GW, out of which 3.2 GW was won in the last two months.
JSW Energy's earlier target of spending $2 billion every year will now go up proportionately as it expects the target date to get preponed, Chief Executive Officer Sharad Mahendra and Chief Financial Officer Pritesh Vinay told NDTV Profit in an interview.
"Every year, India will need to set up 40–50 GW of renewable capacity to reach 500 GW by 2030. That would entail an investment of $30–35 billion annually," Mahendra said. "The funds raised by us will be the growth capital that would help to contribute to the required capacity building."
Sharad Mahendra, , joint managing director and CEO, JSW Energy (Source: Vijay Sartape/NDTV Profit)
The power producer has the headroom to spend Rs 12,000 crore to Rs 15,000 crore at the current debt to equity ratio of 3:1 before the QIP. After the QIP, Vinay said, the company could borrow additional funds of Rs 15,000 crore and spend an additional Rs 20,000 crore every year at the same debt to equity ratio.
As of Dec. 31, 2023, JSW Energy had a net debt of Rs 26,286 crore and a net debt to Ebitda of 3.5 times, which it said is within the target range of 3.5–4 times.
The operating projects at 10 GW by fiscal 2025 will generate a free cash flow of Rs 3,500 crore, which will aid in debt payments, Mahendra said. "As we fast-track projects, the free cash flow will increase proportionately beyond FY25."
Pritesh Vinay, CFO, JSW Energy (Source: Vijay Sartape/NDTV Profit)
10–15 GW Of Inorganic Opportunities
The company acquired 1.7 GW of Mytrah Energy's renewable platform last year and is continuously in lookout for new opportunities inorganically that can help them to achieve their 20 GW target faster.
JSW Energy sees close to 10–15 GW of opportunities that are in the process of changing ownership as the fund lives of a number of principal shareholders, who are also financial sponsors, are coming to an end, Vinay said. "There are number of such processes that are underway or about to be launched that gives us substantial inorganic opportunities to look at.".
Watch the full conversation here
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