JSWENERGY - JSW Energy Limited Share Price

In the Q1 FY26 earnings call, management provided a robust outlook for JSW Energy, emphasizing its strong growth momentum and strategic initiatives. Key highlights include:

1. Capacity Addition: The company successfully added 1.9 GW of new capacity, increasing its total installed capacity to 12.8 GW, representing a year-on-year growth of approximately 70%.

2. Generation Growth: Net electricity generation increased by 71% year-on-year, rising to 13.5 billion units, showcasing enhanced operational efficiency.

3. Financial Performance:

   • Record quarterly EBITDA reached Rs.3,057 crore, up 93% year-on-year.
   • Profit After Tax (PAT) was Rs.743 crore, a 42% increase year-on-year.

4. Future Capacity Plans: Management reiterated its target to add 3 to 4 GW of capacity during FY26, building on the capacity successfully integrated from acquisitions such as O2 Power and the Mahanadi thermal plant.

5. Debt Outlook: As of the end of Q1 FY26, net debt increased to Rs.59,300 crore, influenced by the acquisition of O2 Power and capex; however, operating debt remains healthy due to the strategic investments made in cash flow-generating assets.

6. Strategic Focus: Investments are directed towards scaling up renewable energy and enhancing domestic coal-based generation to reduce exposure to global coal price volatility.

7. Technological Advancements: Ongoing initiatives include battery storage capacity expansion to 29.4 GWh and pilot projects in green hydrogen, reflecting JSW's commitment to sustainable energy solutions.

8. Long-term Trends: The management expressed confidence in India's evolving energy landscape, with expectations of sustained power demand growth and continued emphasis on clean energy capacity.

Overall, JSW Energy's management is positioned positively for future growth, with a strong focus on operational efficiency, strategic capacity expansion, and financial discipline.

Questions and Answers from Q&A Section of JSW Energy Q1 FY26 Earnings Call

1. Mohit Kumar (ICICI Securities):
Are there any one-offs in the EBITDA for Mahanadi and Mytrah?

Pritesh Vinay:
In Mytrah, there's a one-off late payment surcharge. However, Mytrah's year-on-year generation increased 16% due to a 23% rise in wind generation. For KSK Mahanadi, this was our first full quarter since acquisition, showing no one-offs. We expect further operational efficiencies to enhance performance.

2. Sumit Kishore (Axis Capital):
What is your target organic capex for FY26 and FY27, and how much capacity is due to be commissioned?

Pritesh Vinay:
In Q1, organic capex was Rs.2,400 crores. We are targeting Rs.15,000 to Rs.18,000 crores for FY26, anticipating 3 to 4 GW capacity addition this fiscal, on top of O2's 1.34 GW.

3. Atul Tiwari (JPMorgan):
Can you provide color on your thermal expansion plans, particularly for land availability and fuel supply?

Sharad Mahendra:
We're exploring a fourth unit at KSK Mahanadi, with 40-45% work completed. Our existing assets are in a coal-rich area, easing fuel challenges, and we aim to secure Power Purchase Agreements as thermal demand increases.

4. Ketan Jain (Avendus Spark):
On BESS battery manufacturing, isn't it better to import batteries instead of building a plant?

Sharad Mahendra:
We plan to assemble imported battery cells, not manufacture them. This strategy mitigates potential supply chain issues from restrictions on imports and aims for cost efficiency.

5. Rajesh Majumdar (B&K Securities):
Is the improvement in wind CUF sustainable, and what is the EBITDA projection for KSK Mahanadi?

Sharad Mahendra:
The CUF rise is mainly due to increased efficiency in our newer turbine models. As for KSK Mahanadi, the Q1 performance supports a revised EBITDA projection of at least Rs.2,400 crore for the year.

6. Nikhil Jain (Crisil):
What is the status of CERC tariff approval for the SECI BESS plant?

Sharad Mahendra:
We remain at 60% contracted capacity under Rs.10.8 lakh per megawatt. The approval process is pending at APTEL, and we'll update our stakeholders once we have news.

7. Satyadeep Jain (Ambit Capital):
What contributes to the jump in EBITDA and how will you address the EI on KSK?

Pritesh Vinay:
The EBITDA surge is due to operational efficiencies. For forward-looking EBITDA guidance on KSK, we stand by the minimum Rs.2,400 crore target, emphasizing long-term performance rather than short-term fluctuations.

8. Abhishek Khanna (Kotak Securities):
Out of the 1.9 GW added, how much of the organic capacity comes from O2?

Pritesh Vinay:
Out of the 550 MW added, approximately 450 MW is from O2, relating closely to the acquisition's existing capacity.

These exchanges outline the company's outlook on growth, operational efficiencies, and strategic capital allocation while addressing potential risks and market dynamics.