JSW Energy Stock Jumps 168% In 1 Year: What’s The Future?

JSW Energy Stock rally

JSW Energy’s stock, a major force in power generation, has skyrocketed by 168% over the past year. On the morning of June 24th, 2024, it reached a fresh 52-week high of Rs.740 per share, rising 2.25% in early trade. You might be wondering what’s fueling this phenomenal growth and what the future holds for JSW Energy. 

JSW Energy Stock rally

Read on to uncover the reasons behind this surge and what’s next for this dynamic stock!

(A) Reasons behind the JSW Stock Rally

Here are some of the major reasons behind the sudden increase in JSW Energy stock prices-

(A.1) Robust Financial Performance

First up, JSW Energy has reported stellar financial results recently. Despite a challenging macroeconomic environment, the company has managed to grow its sales. How, you ask? Well, it boils down to efficient cost management and maintaining low debt levels. You know how some companies struggle with debt, right? 

JSW Energy has kept theirs under control, which means more profitability and less financial stress. This solid financial footing has given investors confidence, pushing the stock price higher.

(A.2) Positive Outlook of the Steel Industry

Steel Industry

Guess what? The steel industry is booming, and that’s been great news for JSW Energy. Why? Because expectations of increased infrastructure spending in major economies like the US and China have driven up steel prices. Plus, there have been supply disruptions in the global mining industry, further boosting prices. 

Higher steel prices mean better margins for producers, and that positive sentiment spills over to related sectors, including energy. Investors are betting on continued growth, and that optimism is reflected in JSW Energy’s stock price.

(A.3) Domestic Investor Interest

Another key factor is the surge in domestic investor interest. Domestic institutional investors have been pouring money into Indian equities, with over Rs.2 trillion invested in the first half of 2024 alone. 

This influx of domestic liquidity has supported the rally in many stocks, including midcaps and small-caps like JSW Energy. When local investors show such enthusiasm, it can really drive up stock prices, and JSW Energy has certainly benefited from this trend.

(A.4) Favorable Ownership Structure

Let’s talk about ownership. JSW Energy boasts a strong promoter holding of over 66%. This high level of promoter commitment signals confidence in the company’s future, which can be very reassuring to other investors. 

Additionally, the foreign institutional investor (FII) holding has remained stable, providing further support to the stock price. Stable FII interest often indicates that the stock is seen as a safe and promising investment, contributing to its upward momentum.

(A.5) Positive Market Sentiment

Finally, the broader Indian equity market has been on a bull run. The Nifty 50 and Sensex hit new highs in the first half of 2024, and this positive market sentiment has spilled over to midcap stocks like JSW Energy. 

When the overall market is doing well, it tends to lift many stocks along with it. Investors are generally more optimistic and willing to take on risk, which helps stocks like JSW Energy to rally.

Hence, all these factors combined have driven the stock to new heights, and investors are keen to see what the future holds for this dynamic company. 

Keep an eye on it, because with all these positives, JSW Energy might continue to shine. How? Just look at the current developments of this company in the next section.

Note: Do you know, recently we saw various stock rallies viz.-

(B) Current Developments in JSW Energy

Here are some of the latest developments in JSW Energy-

(B.1) Major Power Purchase Agreements

First off, JSW Energy Neo, through its subsidiary, just inked some big power purchase agreements (PPAs) for wind and solar projects. The combined capacity of these projects is a whopping 1,325 MW i.e. 1,025 MW with the Solar Energy Corporation of India Limited (SECI) and 300 MW with Gujarat Urja Vikas Nigam Limited (GUVNL). 

The 1,025 MW wind PPA with SECI is particularly noteworthy. It’s SECI’s largest single-tranche agreement ever, featuring a blended tariff of Rs 3.62 per kWh for a 25-year supply period. These wind projects are set to be located in Gujarat (JSW Renew Energy Eight Limited) and Karnataka (JSW Renew Energy Four Limited), and they’re expected to start operations within 24 months. This development boosts JSW Energy’s locked-in wind capacity to an impressive 4.8 GW.

(B.2) Expanding Solar Energy

But that’s not all. JSW Energy has also secured a PPA for 300 MW of grid-connected solar capacity with GUVNL. This project, part of Gujarat State Electricity Corporation Limited’s RE Park at Khavda, has a tariff of Rs.2.66 per kWh over 25 years. The solar project (JSW Renew Energy Ten Limited) is scheduled to go operational within 21 months, further increasing the company’s locked-in solar capacity to 3.3 GW.

(B.3) Impressive Generation Capacity

With these new agreements, JSW Energy’s total locked-in generation capacity now stands at a staggering 13.6 GW. This includes 7.3 GW of operational capacity, 2.6 GW under construction across wind, thermal, and hydro sectors, and a renewable energy pipeline of 3.7 GW. Among this pipeline, there are PPAs for 1.3 GW. 

Additionally, the company has 3.4 GWh of locked-in energy storage capacity through battery energy storage systems and hydro-pumped storage projects.

(B.4) A Powerhouse in the Energy Sector

JSW Energy is a leading private sector power producer in India, part of the $24 billion JSW Group. The company has made its mark across the power sector value chain with diversified assets in power generation and transmission. 

Strong operations, robust corporate governance, and smart capital allocation strategies have allowed JSW Energy to deliver sustainable growth and create value for its stakeholders. Since starting commercial operations in 2000 with its first thermal power plants in Vijayanagar, Karnataka, the company has expanded its power generation capacity from 260 MW to an impressive 7,290 MW. 

Their portfolio now includes 3,508 MW of thermal power, 1,716 MW of wind, 1,391 MW of hydro, and 675 MW of solar, ensuring diversity in geographic presence, fuel sources, and power off-take arrangements.

(B.5) Future Vision

Looking ahead, JSW Energy is constructing various power projects totaling 2.6 GW, with a vision to achieve a total power generation capacity of 20 GW by 2030. Their market capitalization, according to the Bombay Stock Exchange (BSE), stands at Rs.1,28,478 crore.

(C) What’s the Future of JSW Energy Stock

JSW Energy future outlook

Are you curious about the future of JSW Energy stock? Guess what? There’s a lot happening that makes this stock an exciting one to watch. Let’s break it down so you can understand why many experts are bullish on this company.

(C.1) New Wind Solar Hybrid Power Project

On June 21, 2024, JSW Energy announced a big win. Its subsidiary, JSW Neo Energy Ltd, received a letter of award for a 300 MW Wind-Solar Hybrid Power Project from the Solar Energy Corporation of India Ltd (SECI). This project is part of SECI’s bid for setting up 1,200 MW of ISTS-connected Wind-Solar Hybrid Power Projects (Tranche VIII). 

Why is this important? 

This new capacity boosts JSW Energy’s total locked-in capacity to an impressive 13.6 GW. It’s a significant step towards their ambitious goal of reaching 20 GW generation capacity and 40 GWh of energy storage by 2030. 

With the current installed generation capacity at 7.3 GW, the company expects to increase this to 9.8 GW by the end of the year. 

(C.2) Ambitious Goals and Carbon Neutrality

You know, JSW Energy isn’t just about expanding its capacity. The company has set an ambitious target to achieve Carbon Neutrality by 2050. This means they are not only focusing on growth but also on sustainability. As the world moves towards greener energy solutions, companies with strong environmental goals are likely to attract more investors.

(C.3) Positive Brokerage Outlooks

Let’s see what the experts have to say about JSW Energy’s future-

  • Jefferies: This brokerage firm is quite optimistic about JSW Energy. They highlighted that the company is improving profitability in its acquired portfolio and is on track to achieve the 20 GW capacity target by FY30. Jefferies forecasts a 33% Compound Annual Growth Rate (CAGR) in Earnings Per Share (EPS) for FY24-27. They have maintained a ‘buy’ rating on the stock and raised the target price to Rs.690 from Rs.600 earlier.
  • JM Financial: Another positive outlook comes from JM Financial. They believe JSW Energy is right on track to achieve its targets of 10 GW by 2025 and 20 GW by 2030. During FY24, the company added or secured 681 MW of greenfield renewable energy capacity and 3.4 GW of locked-in renewable energy capacity, including SECI’s 250 MW/500 MWh Battery Energy Storage System (BESS) project. JM Financial has also maintained a ‘buy’ rating and increased the target price to Rs.648 from Rs.555 earlier.

(D) The Road Ahead for Investors

So, what does this mean for you as an investor? With the company’s strong focus on expanding its renewable energy capacity and achieving carbon neutrality, JSW Energy is positioned well for long-term growth. 

Their strategic projects and increasing capacity are likely to drive profitability and investor confidence. The positive assessments from top brokerages further bolster the outlook for the stock

So yes, JSW Energy has a bright future ahead. The new wind-solar hybrid project, ambitious growth targets, and commitment to sustainability are all strong points in their favor. 

With brokerages like Jefferies and JM Financial giving it a thumbs up and raising their target prices, it’s clear that JSW Energy is on a solid path. 

If you’re looking for a stock with potential, this one might just be worth watching closely!

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Published By: Supti Nandi
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