A Sajjan Jindal firm that returned 1,900% in 4 years is now eyeing ‘green’ bucks

At one point, many thought of it as a minnow struggling against the current. But Sajjan Jindal’s JSW Energy learnt how to ride the tide and proved its critics wrong.The company’s share price, which was languishing at ₹35 in 2020, has skyrocketed to ₹700, registering a meteoric rise of more than 1,900% in the past four years.This powerhouse performance has got the big boys of the equity market roll up their sleeves. Foreign institutional investors (FIIs), known for spotting winners, are gung-ho about JSW Energy. Their stake has jumped from 5.14% to 13.34% in just the past year.So, what’s powering JSW Energy?Greener pasturesAs India, the world’s third-largest power producer after China and the US, grapples with low per-capita consumption, JSW Energy is perfectly positioned to capitalise on the immense potential for growth.The company currently generates a staggering 7,290MW of electricity. This portfolio is a symphony of diverse energy sources, each playing key roles. medium111276143While the 3,508MW thermal power portfolio acts as the sturdy foundation, ensuring a steady flow of energy, the company wants renewable power to have a bigger play, contributing a remarkable two-thirds to its total capacity by 2030. As of now, it has 1,391MW of hydropower, 1,716MW of wind power and 675MW of solar power capacity.India’s share in renewable power is projected to increase from 43% in FY24 to 65% in FY32. This commitment to a greener future is further underscored by JSW’s ambitious goal of generating 20GW of renewable energy by 2030 through capacity addition, which is in line with the country’s renewable energy goals.Additionally, the company boasts of a 1GW solar module manufacturing facility, further solidifying its commitment to clean energy. medium111276187“We expect higher generations to come from the new renewable capacities which are to be commissioned this year,” notes Vinod TP, a research analyst at Geojit Financial. “Additionally, we turn optimistic on the revival of hydel generation as above-normal monsoons are forecasted by the IMD. JSW Energy’s Ebitda is expected to grow at 25% CAGR (compound annual growth rate) in the FY24-26E period as a favourable generation mix will help in profitability growth.”JSW Energy is gearing up for a planned capital expenditure of ₹15,000 crore in the coming fiscal. This investment underscores the company’s commitment to playing a leading role in India’s clean energy revolution.JSW Energy’s growth strategy is fuelled by internal revenue generation, ensuring a sustainable financial foundation. It has a strong portfolio, with 85% of the projects tied to long-term power purchase agreements (PPAs). The remaining assets and PPAs have an impressive average lifespan of approximately 24 years and 18 years, respectively.Financially also, JSW Energy is on a strong footing.It registered a strong fiscal ending March 31, 2024, with revenue surging 17% to ₹11,941 crore compared to the previous year. This impressive growth was mirrored in the company’s net profit, which jumped 17% to ₹1,723 crore. medium111276156Maintaining consistent profitability, JSW Energy’s profit margin remained steady at 15%. This demonstrates the company’s ability to translate revenue growth into sustainable earnings. JSW Energy’s earnings per share climbed to ₹10.5, a significant improvement from ₹9.01 in 2023. This translates into a healthy increase in shareholder value.Strategic biddingJSW Energy isn’t simply chasing every bidding opportunity to strengthen its green energy play. It has devised a strategic approach targeting a mid-teen post-tax equity internal rate of return. This ensures the company prioritises projects that deliver strong financial returns while contributing to a cleaner, more sustainable future for India’s power sector.“The bidding environment has been a scene of intense competition, with the government announcing tenders worth a staggering 70GW and auctions exceeding 40GW in FY24,” says Sharad Mahendra, joint managing director and CEO of JSW Energy. “JSW Energy has emerged as a key player, bagging a sizeable 18% (or 3.4GW) of the total auctioned capacity in Q4 FY24.”To be sure, India has an ambitious target of 50GW renewable energy bidding per annum. medium111276169The bidding landscape is evolving beyond traditional solar and wind options. New projects like hybrids, round-the-clock (RTC) power, green power and even flexibility-based delivery of electricity (FDRE) are gaining traction. JSW Energy’s success in securing a significant portion of the first FDRE bid highlights the growing importance of customised solutions for power discoms.While the merchant power market in India remains robust, with volumes increasing 12% in FY24, the average tariff witnessed a decline to ₹5.24 in FY24 compared with ₹5.94 in the previous year. This can be attributed to a significant drop in international coal prices (from $250 to $110 in FY24), which has positively impacted the sector.The final cutAs India strives to meet its ambitious renewable energy target (500GW by 2030), JSW Energy looks all set to make it big.What is also providing India’s power generators a shot in the arm is record-breaking capacity addition. The country’s total installed capacity has reached a staggering 442GW, with a healthy jump of 26GW in FY24 compared to 16.6GW the previous year. This growth is largely driven by a surge in renewables, which saw a whopping 18.5GW added, surpassing the previous year’s 15.3GW.Solar power led the charge, contributing a massive 15GW to the renewable energy kitty. Wind power also saw a significant boost, reaching a new high of 3.3GW in a single year. This upswing reflects India’s commitment to increase the use of clean energy.