Management targets to sign share purchase agreement (SPA) for the acquisition of 1,050MW GMR Kamalanga Energy project in two weeks.
Shares of JSW Energy gained 2.7 percent intraday on February 5 after Emkay Global upgraded its rating on the stock to buy despite subdued Q3 earnings.
The rating upgrade was largely on account of a recent correction in stock price.
The stock fell more than 21 percent in the last two months amid restructuring agreement with Jaiprakash Power Ventures and AA-/credit watch with negative implications for the company's Rs 300 crore non-convertible debenture (NCD) issued by CARE.
It was quoting at Rs 63.55, up Rs 0.35, or 0.55 percent on the BSE at 11:19 hours IST.
"We have revised our earnings estimates to factor in low plant load factor (PLF) at Vijaynagar plant. The stock price has corrected recently and is attractively valued at CMP. Hence, we upgrade it to a buy with a price target of Rs 73," said Emkay after earnings.
The company's Q3FY20 net generation declined 10.5 percent YoY to 4.6 billion units, primarily due to subdued nationwide demand due to a slowdown in economic activity. Average realisation too declined 9.8 percent YoY to Rs 4.3 per unit and revenues declined 19.5 percent YoY to Rs 1,950 crore.
Net generation at its Ratnagiri and Vijaynagar plants fell 11 percent and 20 percent YoY to 1.75 billion units and 802 million units, respectively, due to lower demand and a fall in merchant rates.
Generation also declined at its Barmer plant by 12.8 percent YoY to 1.3 billion units due to low offtake by discom. However, generation increased 6 percent YoY to 730 million unit across the hydro plants due to improved water availability.
At the operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) fell 13.6 percent YoY. Interest expenses dropped 11.4 percent YoY to Rs 260 crore as a result of debt repayments.
However, adjusted profit after tax rose 118.5 percent YoY to Rs 350 crore due to a write-back of tax expenses.
Management targets to sign a share purchase agreement (SPA) for the acquisition of 1,050MW GMR Kamalanga Energy project in two weeks. For 700MW Ind-Bharat Energy, approval by the NCLT is under process for the resolution plan submitted by the company.
"We will consolidate the financials of these projects after the SPA and NCLT approvals," said Emkay.
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