Buy JSW Energy, target price Rs 73: Motilal Oswal

Motilal Oswal has given a buy rating to JSW Energy with a target price of Rs 73. The share price moved up by 0.09 per cent from its previous close of Rs 58.60. The stock’s last traded price is Rs 58.65.

JSW Energy Ltd., incorporated in the year 1994, is a Mid Cap company (having a market cap of Rs 9634.94 Crore) operating in Power sector.

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 1938.57 Crore, up 7.39 % from last quarter Sales of Rs 1805.15 Crore and down 8.50 % from last year same quarter Sales of Rs 2118.55 Crore Company reported net profit after tax of Rs 349.62 Crore in latest quarter.

Investment Rationale
80% of JSWE’s 4.4GW capacity is under long-term PPAs, which generate strong free cash flows. These tied-up PPAs contribute ~95% to the company’s EBITDA. Further, interest cost savings and operational efficiencies have helped to partly offset lower merchant volumes. The brokerage raises FY21/FY22E estimates by 12%/7% on account of these measures. It maintains Buy and raises TP to INR73/share (earlier INR64/share), broadly led by higher value of its stake in JSW Steel.

Promoter/FII Holdings
Promoters held 74.9 per cent stake in the company as of Sept 30, 2020, while FIIs held 5.9 per cent, DIIs 8.3 per cent and public and others 11 per cent.