Target: ₹885
CMP: ₹725.90
JSW Energy, one of the leading IPPs in India, aims to achieve 20GW of capacity by FY30, driven by RE. Currently, the company has 7.54GW of installed capacity, with a pipeline of 8.3GW of renewable energy and 2.3GW of capacity under construction. The company has tied up about 92 per cent of current installed capacity through LT PPAs, enabling high visibility on earnings. Favourable RE bid wins and strong merchant market tariffs further enhance operational and cash flow visibility through FY24-FY27F.
Further, the company has also forayed in energy storage systems, whereby, our analysis indicates JSW will accrue about 95 per cent of EBITDA margin for the business.
We initiate coverage of JSW Energy with a Buy rating and an EV/EBITDA-based TP of ₹885, underpinned by a robust outlook with a 38 per cent EBITDA CAGR over FY24-27F supported by JSW’s robust growth in RE generating capacities with mid-teen IRRs, strong PPA mix, and potential for incremental growth from green hydrogen and PSP; incrementally strategic acquisitions at the right price can provide incremental triggers.
We believe JSW is well-positioned to capture further robust growth as it will likely achieve its 20GW by 2030 target ahead of time.