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Informist, Friday, Jan. 24, 2025

By Avishek Rakshit

KOLKATA – Capacity additions on account of acquisitions, better utilisation of resources, and some demand tailwinds for the company could lead JSW Energy Ltd. to report a healthy on-year growth in its consolidated revenue and profit for the December quarter, but these are likely to fall on a sequential basis due to the seasonality of the business.

JSW Energy is expected to report an 84.2% on-year growth in its consolidated profit to INR 4.3 billion, and revenue is estimated to increase 22.8% to INR 31.2 billion, according to the average of estimates from four brokerages. Sequentially, however, the net profit is expected to decline 50.1%, and revenue is expected to fall 3.6%, according to the estimates.

The company will declare its Oct-Dec results on Tuesday, to be followed by a call with sector analysts.

The sequential decline is primarily owing to seasonality of the power business. During winters, power demand falls as compared to the summers and the monsoon season. As a result, most of the power generation and distribution companies habitually report a sequential decline in profit and revenue during the onset of the winter. During summers, however, due to pent-up demand, power generation companies report high sequential growth.

However, JSW Energy is expected to have witnessed some demand tailwinds on a year-on-year basis, which along with capacity additions, are likely to aid growth. Most of the capacity additions are on account of acquisitions that JSW Energy has been making and commissioning over the past few years.

Among the brokerages, Motilal Oswal Financial Services Ltd. has the highest consolidated profit estimate at INR 5.5 billion, and Elara Securities (India) Pvt. Ltd. has the lowest at INR 3.0 billion. In terms of revenue, Motilal Oswal again has the highest revenue estimate at INR 39.1 billion, and JM Financial Institutional Securities Pvt. Ltd. has the lowest estimate at nearly INR 28 billion.

JSW Energy reported a consolidated profit of INR 2.3 billion in the year-ago quarter, and INR 8.5 billion during Jul-Sept. The consolidated revenue was INR 25.4 billion in the December quarter of 2023-24 (Apr-Mar), and INR 32.4 billion in Jul-Sept.

Nearly all brokerages said that commissioning of the 350 megawatt Ind-Barath project would contribute significantly towards financial growth. In December 2022, JSW Energy acquired Ind-Barath Energy (Utkal) Ltd. under the Insolvency and Bankruptcy Code for INR 10.5 billion. This stressed generation company owns two 350 MW thermal power units in Jharsuguda, Odisha. Although one of these units was completed, it was not operational due to financial stress, and post-acquisition, JSW Energy hurried to complete the other 350 MW unit.

Motilal Oswal said that during Oct-Dec, JSW Energy is estimated to have benefitted from the full-quarter contribution of Ind-Barath, which was in the ramp-up phase during the past two quarters. The commissioning of this project fully, according to JM Financial, will account for the on-year financial growth. According to estimates from Kotak Institutional Equities, JSW Energy's power generation increased 13% on year to 6.9 billion units.

JSW Energy is targeting an operational capacity of 10 gigawatts in the coming days, and currently has 7.7 GW operational capacity across thermal, hydel and renewable energy. The company also has 16.2 gigawatt-hour of locked-in energy storage capacity through the battery energy storage system and hydro-pumped storage project. It aims to reach 20 GW generation capacity and 40 GWh of energy storage capacity by 2030.

Informist recently reported that JSW Energy had outbid Adani Power to acquire the entire 1,800 MW portfolio of KSK Mahanadi Power with an offer of nearly INR 160 billion. Focussed on acquisitions to grow its portfolio, JSW Energy in March 2023, through its subsidiary - JSW Neo Energy, had acquired a renewable energy portfolio of 1,753 MW from Mytrah Energy for around INR 101.5 billion.

JSW Energy's earnings before interest, tax, depreciation, and amortisation for Oct-Dec is estimated at INR 13.8 billion, according to the average of estimates from four brokerages. Motilal Oswal has the highest estimate at INR 16.6 billion, and Kotak Institutional Equities has the lowest estimate at INR 12.3 billion.

At the current price, the stock is down 18.0% after the company announced its September quarter earnings on Oct. 24. Although the company declared its Jul-Sept earnings after trading hours, the stock closed 3.1% lower at INR 671.0. The following day, the share price opened lower at INR 665.0, and closed at INR 668.9, down 0.6%, after hitting a high of INR 674.3, and a low of INR 641.7.

Following are the Oct-Dec earnings estimates for JSW Energy based on reports from four brokerage firms in descending order by the estimate of net profit:

On Friday, shares of JSW Energy ended 1.4% down at nearly INR 544.15 on the National Stock Exchange. 

Edited by Tanima Banerjee

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