JSWENERGY - JSW Energy Limited Share Price

In the Q2 FY26 earnings call, management provided a positive outlook for JSW Energy, emphasizing a significant turnaround in the power sector. Key highlights include a 3.3% increase in power demand year-on-year to 449 billion units in Q2, and a 0.8% rise in H1 demand. Management noted that India's installed power capacity has reached 501 GW, with renewable energy driving growth, contributing 25 GW in H1 FY26.

For thermal energy, the currently installed capacity stands at 245 GW, with projections indicating a rise to nearly 300 GW by FY32. Management reported winning several state thermal bids, totaling 11.6 GW in H1 FY26. Notably, they secured a 400 MW LOA for the Utkal plant, enhancing cash flow predictability and reducing open capacity from 8% to 5%.

Management expects continued robustness in under-construction projects, stating they are developing 12.5 GW of generation projects, fully tied under long-term PPAs. These projects are expected to raise total capacity to approximately 26 GW upon completion.

Financially, net generation soared by 52% YoY in Q2 FY26, reaching 14.9 billion units, contributing to a 55% increase in total revenue to over Rs.5,300 crores. EBITDA was also strong, rising by 67% to Rs.3,200 crores, while the net debt stood at approximately Rs.62,000 crores.

Looking ahead, capital expenditures are projected at Rs.1,30,000 crores by 2030, targeting a capacity expansion to 30 GW and 40 GWh of energy storage. Among strategic developments, management highlighted the acquisition of GE Power India's Boiler Manufacturing Business, bolstering in-house capabilities. Additionally, the establishment of a battery assembly plant in Pune and the acquisition of the Tidong Hydro Power Plant are seen as pivotal moves for future growth.

Overall, the management remains committed to executing their strategy emphasizing energy security and sustainability, projecting sustained growth and improved returns.

Q1: "Is it possible to explain the lower EBITDA in Karcham and Baspa during the quarter?"
A1: The lower EBITDA is primarily due to the Supreme Court order affecting our sale of free power. Previously, we sold this power in the merchant market, but now we're obligated to supply it to the Government of Himachal Pradesh, leading to reduced EBITDA despite better generation figures.

Q2: "On the Ind-Barath EBITDA, is it lower QoQ?"
A2: The lower EBITDA in Ind-Barath is attributed to a scheduled planned shutdown of units for maintenance. This aligns with our strategy to prepare for increased seasonal demand in the second half of the year.

Q3: "What is the purpose of acquiring GE Power assets, specifically in boiler manufacturing?"
A3: Acquiring GE's boiler business enhances our in-house capabilities, allowing us to produce key pressure parts critical for our thermal expansion. This strategy addresses supply constraints from existing suppliers and ensures timely delivery for our projects, especially for Salboni.

Q4: "Are you seeing instances of grid curtailment for RE capacities during solar hours?"
A4: While there have been capacity evacuation challenges due to increased solar capacity, we haven't faced significant curtailments so far. Timely rescheduling is crucial, and regulations protect developers during such instances, ensuring revenue is maintained under PPAs.

Q5: "How confident are you about your capacity addition targets for FY26?"
A5: We have no significant impediments to completing our projects; all necessary connectivity and land are secured. We anticipate a significant uptick in CAPEX and capacity additions in the second half to meet our targets.

Q6: "What are the terms for the Karnataka LOA for Ind-Barath?"
A6: The tariff for this LOA is Rs.5.78 per unit at the regional periphery. Given our proximity to MCL, our fuel procurement costs will be attractive, which supports favorable economics for the plant.

Q7: "Can you discuss the ongoing trends with thermal state PPAs?"
A7: States are increasingly looking to sign new thermal PPAs within their borders, emphasizing regional development and employment, which is leading to a stronger pipeline of bids across several states.

Q8: "What timeline do you expect for signing pending PPAs?"
A8: While we can't provide a specific timeline for signing pending PPAs, especially for solar, we remain confident about reaching our target capacity of 30 GW and are well-positioned to do so, despite delays.

Q9: "What will the annual production capacity be for your in-house boiler facility?"
A9: The new boiler facility can produce the equivalent of 1.5 boiler units per year, though it will take about 18 months to deliver a complete boiler, aligning with our project timelines.

Q10: "Can you provide CAPEX figures for your battery energy storage systems?"
A10: We cannot disclose specific CAPEX per MWh for BESS. The cost varies due to multiple factors, including supplier negotiations and project designs, which makes providing a fixed number challenging. However, we aim for mid-to-high-teen IRR on all bids.