⚡ At a Glance
JSW Energy has morphed from a boring thermal power utility into a renewable energy wannabe with ambitious targets, rising profits—and ballooning debt. But with falling ROCE, overvalued peers, and stock down 29% in 1 year, is it worth the wattage?
1. JSW Energy 101: Watt’s the Story?
Once a pure-play thermal energy company with predictable returns, JSW Energy is now India’s “rising renewables star”. At least, that’s the brochure pitch. Here’s what it really is:
- Thermal still rules: 63% of power generation in H1 FY25 was thermal
- Total capacity: 3,508 MW thermal + 2,761 MW renewable (wind + hydro)
- Parent Group: JSW Group (steel, infra, cement, paint, and now… sun and wind)
- Market Cap: ₹88,000 Cr
- Stock P/E: 45x (yes, for a power company)
2. The Renewable Romance: Talk Green, Build Coal?
While investors are wooed with green dreams, the power mix still leans thermal:
| Year | Thermal Share | Renewable Share |
|---|---|---|
| FY22 | 75% | 25% |
| H1 FY25 | 63% | 37% |
Plans:
- Target: 20 GW capacity by 2030 (current ~6.2 GW)
- Major solar/wind additions via JSW Neo Energy (subsidiary)
- Acquisitions and government contracts in hydro and solar
🧠 But here’s the rub: Capex is soaring, debt is exploding, and return ratios are falling. Great for press releases, not so great for shareholders.
3. Financials: Revenues Stable, But Valuation Delusional?
🧾 Profit & Loss (Consolidated)
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 6,922 | 8,167 | 10,332 | 11,486 | 11,745 |
| Net Profit (₹ Cr) | 823 | 1,743 | 1,480 | 1,725 | 1,983 |
| ROE (%) | 4.8% | 10.5% | 9.0% | 10.5% | 11.2% |
| ROCE (%) | 9% | 12% | 7% | 9% | 7% |
💣 And the elephant in the balance sheet:
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Total Debt (₹ Cr) | 8,371 | 8,943 | 25,051 | 31,573 | 50,185 |
| Interest Cost (₹ Cr) | 896 | 777 | 844 | 2,053 | 2,269 |
JSW is spending more on interest now than it made in net profit 3 years ago.
4. Valuation: Why Are We Paying Growth Stock Multiples for a Utility?
- Current P/E: 45x
- 5Y Avg EPS: ~₹7.5/share
- FY25 EPS: ₹11.16
- Book Value: ₹157/share
- Stock Price: ₹504
Peer check:
| Company | P/E | ROCE | Div Yield |
|---|---|---|---|
| NTPC | 13.7 | 10.8% | 2.3% |
| Adani Green | 94.5 | 8.7% | 0% |
| NHPC | 27.6 | 7.4% | 2.3% |
| JSW Energy | 45.2 | 6.8% | 0.4% |
📉 Return ratios are worst among peers, yet valuation is second only to Adani Green. Either JSW needs to double profit again, or rerating is inevitable.
5. Capex & Cash Flow: Burning Money to Build Green
- FY25 Capex: ₹23,000 Cr+ (mostly renewables)
- Net Operating Cash: ₹3,838 Cr
- Net Investing Cash: -₹23,613 Cr
- Net Borrowings: ₹20,223 Cr
🚨 Translation: All cash from ops + 20,000 Cr fresh loans = building for a greener future. But this isn’t a startup.
6. Promoters, Public & Pledging
| Quarter | Promoter Holding | FII Stake | Public |
|---|---|---|---|
| Jun 2022 | 74.7% | 5.3% | 9.7% |
| Mar 2025 | 69.3% | 13.4% | 6.2% |
- Promoters cut stake by 5.4% over 3 years
- FIIs doubled stake, likely betting on green narrative
- No pledging visible
👀 Worth noting: FII interest is rising, but JSW isn’t exactly delivering NTPC-level cash flow yet.
7. Fair Value Range: What Should You Pay?
Let’s use a simple base:
- FY25 EPS = ₹11.2
- Assign realistic P/E range: 18x to 22x (accounting for growth, infra risk, and PSU discount)
Fair Value = ₹202 to ₹246/share
📉 vs CMP ₹504 → 60% overvalued based on long-term DCF sanity
🎯 Final Verdict: Power Play or Just PowerPoint Dreams?
JSW Energy is trying to run like a tech startup while burning money like a PSU. Capex is sexy, but returns are lagging. If the green dream plays out, great. But today, it’s priced for perfection with profit that’s only okay.
🏷️ Tags:
JSW Energy, Renewable Energy Stocks, Power Sector, Indian Utilities, Green Energy, NTPC vs JSW, Adani Green Comparison, Infra Stocks, Overvalued Energy Stocks, EduInvesting
✍️ Written by Prashant | 🗓️ June 19, 2025
