Gains for JSW Energy hinge on renewables execution, debt reduction

JSW Energy delivered a steady Q1, but future gains will depend on timely renewable capacity additions, lower debt, and reduced renewable curtailment

JSW Energy’s results for the first quarter of 2026-27 (Q1FY27) met or exceeded expectations on most metrics. 

 

The revenue was reported at ₹5,210 crore, with earnings before interest, taxes, depreciation and amortisation (Ebitda) of ₹2,870 crore and adjusted net profit of ₹470 crore. The revenue was up 1 per cent year-on-year (Y-o-Y), and 16 per cent quarter-on-quarter (Q-o-Q) in Q1. Consolidated Ebitda was up 3 per cent Y-o-Y and 28 per cent Q-o-Q, with Ebitda margin at 55 per cent. The adjusted net profit was down 37 per cent Y-o-Y. The company executed ₹10,150 crore of fundraising, which included ₹3,000 crore preferential allotment, ₹3,150 crore via a partial stake sale, and ₹4,000 cr raised via qualified institutional placement (QIP). The move reduced the company’s leverage.

 

Power demand rebounded with growth of 8.5 per cent Y-o-Y off a low base. Renewable capacity additions include commissioning of 1.1 gigawatts (Gw) in FY27 to date, supporting guidance of 3 Gw addition in FY27. Installed capacity increased to 14.6 Gw, with renewables accounting for 61 per cent. Around 64 megawatts (Mw) is currently sold in the merchant market.

 

The plant load factors (PLFs) were lower at 40 per cent for hydro and 71 per cent for thermal. Hydrology was weak due to less rain and there was a 17-day transmission evacuation outage at KSK Mahanadi and a planned outage at the Ratnagiri plant. Solar PLF was 21 per cent.

 

Net generation volumes were 12.9 billion units (BUs) — down 5 per cent Y-o-Y and up 10 per cent Q-o-Q. The company has added 1.1 Gw of capacity during FY27 till now, taking total capacity to 14.5 Gw. 

 

The company commissioned a Halol wind blade manufacturing facility in June, with an annual capacity of 450 blades (600 Mw). FY27’s capacity expansion would entail a capex of ₹20,000 crore. Management expects generation to normalise from Q2 to meet FY27 targets.

 

Management reiterated the target of keeping net debt to Ebitda under 5 times until 2030. The firm exercised its call option on the remaining 26 per cent stake in Mahanadi. The commissioning of Unit-4 (600 Mw) at KSK Mahanadi is targeted for FY28, with capital cost to be 25-30 per cent lower than a greenfield facility.

 

JSW Energy also signed an agreement to acquire the 300 Mw MCCPL thermal plant in Chhattisgarh. The company raised its stake in JSW Power Systems & Toshiba joint venture to 10.7 per cent, derisking equipment supply and lowering thermal project capital costs.

 

Construction is underway at the Salboni Thermal project. Coal supply is secured through a long-term agreement with CCL.

 

The generation at Mahanadi was impacted by a 17-day transmission evacuation outage caused by extreme wind, resulting in a decline of 184 MUs. The event may qualify under force majeure provisions.

 

For KSK Mahanadi Unit-4 (600 Mw), commission is due for FY28. About 30 per cent of construction work had been completed before acquisition. Existing Chinese suppliers will supply equipment for remaining units. Management expects the project to generate ₹150 crore of annual Ebitda.

 

Out of the 1.1 Gw renewable energy projects commissioned in FY27 to date, 300 Mw is operating under temporary general network access (TGNA) and facing curtailment. This is expected to transition to general network access (GNA) before August 31, when curtailment would cease. Another 400MW from the O2 Power acquisition is TGNA, with GNA approval expected by September-October.

 

Out of the remaining 1.9 Gw to be commissioned during FY27, over 530 Mw comprises group captive projects, insulated from grid risks. Connectivity for the rest has been secured. The Karnataka PSP project has received the letter of intent. JSW Energy has identified an additional 9 GWh PSP site, which can be developed in future.

 

Operational performance was better than expected and the pace of capacity expansions is encouraging. But investors must monitor the pace of renewable energy commissioning and connectivity and potential impact of renewable curtailment, given that 12-14 per cent of solar capacity saw curtailment in Q1.

 

The stock has seen gains of over 15 per cent in the recent past, which means higher valuations. It also has high debt and leverage needs to be controlled. Although the debt profile will lead to higher return on equity, free cash flow generation may be under pressure. 

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The writer is a New Delhi-based independent journalist