Emkay Global Financial is bullish on JSW Energy has recommended buy rating on the stock with a target price of Rs 58 in its research report dated July 31, 2020.
Emkay Global Financial's report on JSW Energy
Management has terminated the GMR Kamalanga deal as the Covid-19 pandemic has severely impacted power demand and induced uncertainty over the expected acquisition synergies. Q1FY21 net generation declined 15.9% yoy to 4.9bn units, dragged by a 17.4%/12.6% yoy fall across the thermal/hydro plants. Average realization too fell 10.9% yoy to Rs3.8/unit, while revenues declined 25.2% yoy to Rs18.1bn. EBITDA decline was, however, restricted at 7.9% yoy to Rs7.5bn due to a steep fall in fuel prices (amid lower generation and coal prices) and low O&M expenses. Interest expenses fell 10.9% yoy and PAT declined 7.5% yoy to Rs2.2bn (above our estimate).
Outlook
We maintain our estimates for FY21/FY22 as we had adjusted them after FY20 results, factoring in the fall in power demand amid Covid-19 concerns. We maintain our TP of Rs58 and Buy rating as 90% of its EBITDA comes from the regulated business. The stock is attractively valued at the CMP (0.5x FY22E P/BV, RoE of 8.5%).
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