JSW Energy Can Rally 60% Says Motilal Oswal, Reiterates 'Buy' On The Stock — Here's Why

On January 13, 2025, JSW Energy announced that the resolution plan submitted by it has been approved by the Committee of Creditors, and it has received the Letter of Intent) from the Resolution Professional for KSK Mahanadi Power Company. Company has now received National Company Law Tribunal approval while the Competition Commission of India approval is awaited. The acquisition is expected to receive final approval by Q1 FY26. .NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Motilal Oswal Report.We conducted a deep-dive analysis of KSK Mahanadi Power Company Ltd., a thermal (operational: 1.8GW + 1.8GW expansion) plant that JSW Energy Ltd. is considering for acquisition. Our key conclusions:we estimate an net present value/share of Rs 27 for JSW Energy’s share of 74% (with a brownfield expansion option); without a brownfield expansion, we estimate the NPV at Rs 16/share; for every Rs 0.2/unit change in Ebitda/unit (~8%), NPV is impacted by 33% (this is key as over time JSW Energy may look to capture synergies and raise Ebitda/unit);for every 5% change in plant load factor, NPV is impacted by 31% (base case PLF: 70%); and while investors are concerned about leverage, we believe the ND/Ebitda ratio for FY26 will rise only marginally to 5.6x (current estimate: 5.1x) and could decline slightly in FY27.Key risks to our estimate: we assume an additional 1.8GW capacity to commence operations by FY29 with an estimated capex of Rs 189 billion; potential cost overruns/delays will impact NPV,Power Purchase Agreement with TANGEDCO is set to expire in FY29; we assume renewal at Rs 5.4/kwh with another off-taker, and'the plant has some contingent liabilities amounting to Rs 4.02 billion; we need clarity from the management on whether JSW Energy would be liable in the event of an adverse outcome on these. We reiterate our Buy rating with an SoTP-based target price of Rs 705; KMPCL’s NPV is currently not a part of our SoTP valuation. The cut in our target price is driven by lower valuation multiples for the thermal and hydro businesses. .Click on the attachment to read the full report:.Vardhman Textiles, Gokaldas Exports Among Systematix' Top Stock Picks To 'Buy' In Textile Pack — Here's Why.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

JSW Energy Can Rally 60% Says Motilal Oswal, Reiterates 'Buy' On The Stock — Here's Why

Motilal Oswal reiterates Buy rating with an SoTP-based target price of Rs 705; KSK Mahanadi Power Company’s NPV is currently not a part of our SoTP valuation.

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JSW Energy Can Rally 60% Says Motilal Oswal, Reiterates 'Buy' On The Stock — Here's Why

Motilal Oswal reiterates Buy rating with an SoTP-based target price of Rs 705; KSK Mahanadi Power Company’s NPV is currently not a part of our SoTP valuation.

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