JSW Energy. as my Sixth Company Study

JSW Energy. as my Sixth Company Study | Research Analysis

As part of my 100-Day Research & Analysis Challenge under NISM (Research Analyst), I chose to deep-dive into the Renewable Energy sector, with JSW Energy. as my Sixth Company Study.

This note focuses on:

•Business fundamentals

•Financial performance

•Stock price behaviour

It is the holding company for the JSW group's power business.

Mar Cap: ₹ 77,070 Cr. '

Price to Earning:33.3

ROCE: 6.49 %

Return on equity: 7.41 %

Borrowings: 69,104

Sales growth 3Years: 13%

Profit Var 3Yrs: 2%

Promoter holding: 69.26%

FIIs holding: 9.50% (Decresed from last year)

DIIs Holding: 14.39% (Incresed from last year)

Government Holding:0.03% (Stable)

Public Holding: 6.74% (Decrese from last 3 year)

NO. of Share Holders: 5,88,053 (Increased from last year)

•The company belongs to JSW Group.

•The company also has a JV company engaged in mining activities and an associate engaged in manufacturing of turbines.

Company Overview:

thermal power generation capacity of 3,508 MW '

The company has a total operational renewable energy capacity of 4,232 MW,

Wind: 2,536 MW

Solar: 2,779 MW

Hybrid: 2,026 MW

Thermal: 350 MW

Hydro: 240 MW

Notable clients include:

signed an agreement with Maharashtra State Electricity Distribution Company for a 12 GWh pumped hydro storage facility

Karnataka, Maharashtra, Nandyal and Salboni.

Financial Performance:

~Company has delivered quite normal growth of 7% CAGR over last 5 years.

~Company has been maintaining a healthy dividend payout of 19.7%

~The company's net debt has increased from Rs. 6,963 Cr in FY22 to Rs. 24,875 as of Q2 FY25

Share Price Performance:

Despite positive revenue growth, the stock has decreased.

Stock corrected from levels above 782₹ to around 440₹ for last 2 years.

This divergence between financial growth and stock price create doubts.

Why Is the Share Price Falling?(Cons)

~Stock is trading at 2.64 times its book value

~The company has delivered a poor sales growth of 7.26% over past five years.

~Company has a low return on equity of 7.67% over last 3 years.

~Promoter holding has decreased over last 3 years: -5.39%

Key Learnings from This Analysis-

~Profit growth alone is not enough.

~Cash flow quality and margins matter more than topline numbers.

~Renewable Energy is a structural story with cyclical earnings.

Conclusion-

The renewable energy opportunity remains intact, but:

In execution-driven businesses, sustainable profitability and cash flow discipline decide long-term shareholder returns.

Last but not least:

In April 2024, the company raised Rs. 5,000 Cr through a QIP of 10,30,92,783 equity shares at Rs. 485

⚠️ Disclaimer:

Investment in the securities market is subject to market risks. Read all related documents carefully before investing. Past performance is not indicative of future results. The stock market is unpredictable, and returns are not guaranteed. Make informed decisions, stay cautious, and consult a financial expert before investing.

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