JSW Energy's Ebitda growth fueled by debt

Copyright © HT Digital Streams Limit all rights reserved. Manish Joshi 3 min read May 19, 2025, 05:30 IST JSW Energy’s acquisition of O2 Power, a renewable power business, will start reflecting in FY26 Financials. (Reuters) Summary investors expect JSW Energy’s EBITDA to double in FY26 to £ 10,500 crore. But it can be accompanied by higher debt. The share of JSW Energy Ltd rose about 3% to £ 504 on Friday, although the results for the quarter and the end of March were not impressive. Reported profit after tax year-on-year (yoy) year-on-year rose to £ 415 in Q4FY25, but this was mainly because other revenue more than doubled to £ 308. Other income included a one-time element of about £ 100 crore related to rewriting for deferred consideration related to mytrah energy. The Q4FY25 EBITDA in particular rose 3% to £ 1,204 crore, while the metric for FY25 fell by 3% to £ 5,221 crore. What does the street’s positive response explain? This can be attributed to the expectations of EBITDA that almost doubles in FY26 to £ 10,500 crore, based on Bloomberg’s consensus estimates. While the estimated ebitda growth looks aggressive, a deep dive in the new power generation coming on current shows that it is feasible to achieve the most of it. Read also | Mint Primer | Can JSW decision upset the balance of the insolvency regime? KSK Mahanadi made a contribution to Ebitda in Ebitda about a month after completing the acquisition on March 6. Thus, KSK, which is a thermal power station, can achieve an annual EBITDA of £ 2400 crore of its operational capacity of 1,800 MW, even if the total capacity is 3.600 MW. KSK alone, with numbers of full annual operations, can lead to an almost 40% jump in the total FY26 total ebitda of the company above FY25. JSW Energy’s acquisition of O2Power, a renewable power business, will also start reflecting in FY26 Financials. About 1.3 GW capacity is in operation and is likely to reach 2.3 GW by June end. If we accept an annual ebitda of £ 1,500 crore, it should add about £ 1,000 crore to the company’s FY26 Ebitda. Note that Unit 2 of UTKAL with 350 MW capacity was implemented from January 15. It will also contribute to the growth of the ebitda growth, although it is difficult to quantify the upside, as the plant’s power generation is sold at a place base and the short-term power rates are difficult to predict. Read it | L&T, Afcons, JSW Vie for Nicobar project, despite the strong ebitda growth prospects in FY26, of their respective peaks in September, the shares of JSW Energy have dropped almost 37% and the BSE power index is 22% lower. The underperformance of the stock is due to rich valuations. There are now concerns about the execution risks and possible dilution of shares that may be needed, given the ambitious growth strategy of the business. ICICI Securities Ltd points out, although most of the new assets of JSW Energy are a valuable value, the financing of these projects will require the stock increase at the holding company or a special vehicle level. Note that JSW Energy again increased its capacity goals from 20 GW with FY30 to 30 GW with FY30. The target for energy storage projects was also held at FY30 at 40gWh. Depending on the available opportunities, growth can be obtained from organic and inorganic routes. The company estimates £ 1.3 trillion over a five -year period ending FY30 to reach the desired capacity. Capex needs for FY26 are about £ 15,000-18,000 crore. Certainly, although JSW Energy’s operating power generation capacity has increased in a fair cut, it has been achieved through higher leverage. Net debt at the end of the FY25 is £ 44,000. If it does not increase fairness, the debt is likely to rise in FY26, as Capeex is much higher for the full year than the estimated cash gains (or ebitda minus interest costs). Even after doubling EBITDA this financial year, the share is cited at EV/EBITDA of 11x based on Bloomberg Consensus raming for FY26. And read | Long -term uncertainty awaits JSW Steel after the Supreme Court rejected the resolution plan for Bhushan Power, all the business news, market news, news events and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #JSW Energy Mint Specials