JSW Energy: Up 49% in 2023 so far, should you still buy the stock?
JSW Energy with a ‘buy’ call and a target price of ₹530, indicating an upside of 34 percent over the next 24 months. The stock has already risen 37 percent in the last 1 year and 49 percent in 2023 YTD, giving positive returns in 7 of the 11 months so far. It has gained over 6 percent in November so far after a 12 percent fall in October.
However, it gave 4 straight months of positive returns before that between June and September, jumping over 72 percent in this time. Its current 9.8 GW capacity comprises of 3.8 GW of thermal capacity (incl. merchant), 3.6 GW of wind, 0.6 GW of solar & 1.6 GW of hydro, informed Ventura.
Over the period from FY23 to FY30, the firm is expected to add another 10.2 GW of RE projects at an estimated capex of ₹74,000 crore, added the brokerage. Apart from power generation, the company also forayed into the new age business of green hydrogen and derivatives and solar module manufacturing with capacities of 3,800 TPA and 1 GW, respectively. "Going ahead, we expect the company’s revenue to reach ₹18,700 crore (at 21.9 percent CAGR) on the back of 12.3 GW of capacity coming up by FY26.
The EBITDA is expected to grow 3.5x to ₹10,667 crore with the optimization of acquired RE assets (Mytrah) and an increased mix of high-margin merchant demand. As a result, EBITDA margins are expected to enhance to 57.1 percent by FY26 from 31.8 percent clocked in FY23," forecasted the brokerage. Risks to its thesis include: (1) Change in regulatory policies.
(2) Volatility in natural factors affecting power generation. • The company has shown accelerated growth in the renewable energy segment with a pan-India presence and high EBITDA margins. • The company has shown strong commitment towards capacity additions and
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