Power PSU stock: Brokerage sees over 50% upside despite weaker-than-expected Q1 earnings; check targets

Elara Capital has reiterated its positive stance on state-run power producer SJVN Ltd shares even as the company posted lower-than-expected June quarter (Q1 FY27) earnings.

Elara retained its 'Buy' rating with a target price of 106, keeping its earnings estimates unchanged. The brokerage said SJVN's revenue rose 52 per cent year-on-year (YoY) to Rs 1,390 crore, although it declined 7 per cent sequentially. EBITDA increased 19 per cent YoY.

The brokerage attributed the earnings miss primarily to weak hydro generation. Hydro output declined 41 per cent YoY, with generation at the Nathpa Jhakri and Rampur hydro projects falling 40 per cent and 41 per cent, respectively.

However, Elara highlighted an improvement in the thermal business. Generation from the Buxar thermal power plant increased 15 per cent quarter-on-quarter (QoQ), helping reduce losses from the company's thermal and renewable energy portfolios.

On the capacity expansion front, Elara noted that SJVN's installed capacity stands at 4.2 GW, while another 3.9 GW is under construction. The company continues to advance its project pipeline, although its earlier target of reaching 25 GW by FY30 is under review amid slower renewable energy tendering and execution challenges.

SJVN shares were last seen trading 1.56 per cent higher at Rs 69.68 in Monday's trade. At this price, Elara's target price of Rs 106 suggests an upside potential of 52.12 per cent.

Separately, JM Financial said SJVN's revenue came in below its expectations. The brokerage estimated revenue at around Rs 1,400 crore, up 52 per cent YoY, supported by incremental generation from the first commissioned unit of the 2x660 MW Buxar thermal power plant.

JM Financial added that adjusted profit after tax (PAT) stood at around Rs 260 crore, up 14 per cent YoY, exceeding its estimates due to lower finance costs.

Unlike Elara, JM Financial maintained a 'Reduce' rating on the stock with an unchanged target price of Rs 67, and said a detailed research note would follow.