JSW Energy: High energy!

BSE Code: 533148,

CMP: Rs.67.70,

 FV: Rs.10.

-By Subramanian Mahadevan

Mumbai-based JSW Energy Ltd is a part of the $11 billion conglomerate - JSW group, a part of the O.P. Jindal group with strong footprints across core economic sectors namely steel, energy, infrastructure, cement ventures and sports with a diverse workforce of over 40,000 spread across India, USA, South America and Africa. It launched its IPO in December 2009 at an issue price of Rs.100/share to raise around Rs.2700 crore. JSW Energy operates 4,531 MW (Thermal – MW and Hydel – 1,391 MW) of power generation capacity with a vision to achieve 10,000 MW in power generation by 2020 coupled with transparent operations and stringent corporate governance norms setting benchmarks in the Indian power sector. 

During the last six years, JSW Energy has enhanced its power generation capacity from 260 MW to 4,531 MW (17.4 times) by strategic approach to expansion, ensuring diversity in geographic locations, fuel sources and power off-take arrangements and eventually helping itself to de-risk the business during tough times. Despite numerous acquisitions, JSW Energy’s debt:equity ratio still remains comfortable at 1.8 compared to its peers. 

The current challenging environment is affecting the profit margins of the power sector, which will no longer be a problem once the broader economy and industrial growth picks up. We have a strong Buy on this uninterrupted dividend-paying Company for decent returns.