JSW Energy Shares Jump 6% on Strong Q1 Results; What Should Investors Do Now?

JSW Energy Shares Jump 6% on Strong Q1 Results; What Should Investors Do Now?

JSW Energy, a firm that produces electricity, had a surge in its stock price of up to 6% as a result of the company’s impressive 1QFY23 results, which included a 135% YoY profit growth driven by greater revenues. On the strength of improved revenues, net profit increased to Rs 560 crore in Q1. In the same fiscal quarter last year, the profit after taxes was Rs 201 crore. The total revenue increased 68% YoY, from Rs 1,860 crore in the first quarter of FY22 to Rs 3,115 crore.

The business claimed that with one of the best balance sheets in the industry and a lucrative and cash-generating operating portfolio, it was in a strong position to pursue development. At the end of June, it had Rs 1,825 crore in cash and cash equivalents.

JSW Energy stock began with a gain of 4.91 percent today at Rs 245.70 compared to the previous closing of Rs 234.20 on BSE, buoyed by the robust earnings. The stock increased 6.77 percent, reaching an intraday high of Rs 250.05. The price of the stock is higher than the 5-day and 20-day moving averages, but lower than the 50-day, 100-day, and 200-day moving averages.

The stock increased 10.06% in a year and decreased 20.51% in 2022. JSW Energy’s stock price has increased 16.21% in the past month. A total of 1.39 lakh shares of the company were traded, resulting in a 3.43 crore rupee turnover on the BSE. The company’s market value increased to Rs 39,374 crore.

The rise in revenue is supported by increased short-term sales, the expansion of solar capacity in Vijayanagar, and the uprating of 45MW at Karcham Wangtoo.

According to the firm, underlying finance costs during the quarter decreased 2.5% YoY to Rs 193 crore thanks to a reduction of 18 bps (basis points) in the weighted average cost of debt, which was partially offset by an increase in gross debt.

For the fourth quarter that ended in March 2022, JSW Energy reported an over eight-fold increase in consolidated net profit at Rs 864 crore thanks to greater revenues. In the same quarter the previous year, the company had reported a combined net profit of Rs 107 crore.

What Should Investors Do Now?

JSW Energy was praised by Kotak Institutional Equities for establishing ambitious growth goals based on renewable energy and looking into new market potential for green hydrogen. After considering several inorganic alternatives, “JSW Energy management demonstrated its capacity to drive return accretive growth,” the statement read.

The domestic brokerage company, however, kept its “sell” rating because it thinks the stock price at the moment undervalues all the advantages of anticipated capacity additions and the ensuing growth in earnings through the financial year 2030.

When compared to the current market price of Rs 245.35, Jefferies’ recommendation to “buy” JSW Energy shares represents a gain of 28%. The target price set by Kotak Institutional Equities is Rs. 115.

“JSW Energy may have been the only significant private sector power utility that did not submit a competitive offer throughout the tariff-based bidding period from 2008 to 2012. The business has maintained its B/S, with a d:e well below 3x and acceptable return ratios. We have not valued the company’s 70.03 million shares of JSW Steel separately, according to the international brokerage.

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