Why JSW Energy shares soared 7% today, target price & more

JSW Energy shares rallied 7 per cent in Tuesday's trade after the company received a Letter of Intent (LoI) for acquisition of 3,600 MW KSK Mahanadi for a likely consideration of Rs 16,000 crore. KSK Mahanadi generated an Ebitda of Rs 2,400 crore in FY24 from four operational units. 

JM Financial expects an additional capex of Rs 9,800 crore for completing rest of the units. As per its initial estimates, the transaction is valued at 5.5-6.5 times EV/Ebitda on full capacity, which can be commissioned in 3-4 years. The brokerage retained its 'Buy' rating on the stock with a target price of Rs 759.

On Tuesday, the stock rose 7.22 per cent to hit a high of Rs 555.50 on BSE. JM Financial's target price on the stock suggests 37 per cent potential upside on the counter. 

The 3,600 MW thermal power plant utilises domestic coal and is located in the state of Chhattisgarh. Presently, 1,800 MW (600 MW x 3 units) is operational, which is 95 percent tied-up under long & medium-term power purchase agreements. An additional 1,800 MW (600 MW x 3 units) is under-construction, out of which one unit (600 MW) is 40 per cent completed and balance of plant is in place for remaining 1,200 MW. The plant has a firm arrangement for water and coal transportation for the entire 3,600 MW.

The company's total locked-in thermal generation capacity stands at 7.5 GW and total locked-in generation capacity stands at 28.2 GW. This positions JSW Energy to achieve its target of 20 GW significantly before 2030 and is committed to a net
zero target by 2050, JSW Energy said on Monday.

Joint Managing Director and CEO Sharad Mahendra said: “I am pleased to share a significant milestone in our company's journey as we receive the letter of intent for 3,600 MW KSK Mahanadi thermal power plant. This strategic move positions us to address the increasing energy needs of our nation through a diversified energy mix, integrating both conventional and renewable sources. Strategically located near a coal block, the plant boasts PPA tie-ups and efficient operations, ensuring a reliable power supply."

Mahendra said his company continue to explore new opportunities and strive to remain at the forefront of the energy sector.