Target: ₹500

CMP: ₹432.55

JSW Energy (JSWEL) is poised for strong earnings from its merchant capacities of 1,327MW driven by both increasing peak power deficit in the country and rising merchant power rates over the medium term.

It is also building an integrated portfolio of power generation (RE - 5.9GW by CY24) and Energy Storage (3.4GWh) assets for supplying 24x7 RE power through a combination of strategies - backward integration (1GW WCM manufacturing), inorganic growth (acquired Mytrah’s 1.7GW RE assets), and forward integration (3,800TPA of Green Hydrogen production for the manufacture of green steel) while opportunistically acquiring value-accretive stressed thermal plants (700MW Utkal Thermal Power, merchant capacity).

Our positive view of the company extends beyond strategy to its proven execution capabilities, viz., expeditious execution of Kutehr Hydropower project, quick turnaround of Mytrah’s wind assets, and likely faster commissioning of the Utkal power project.

We expect the company’s Revenue/EBITDA to cross ₹20,000/10,000-crore mark in FY26, registering a 3-year Revenue/EBITDA/PAT CAGR of 27/46/36 per cent over FY23-26.

We upgrade our rating from Hold to Buy, raising the target price to ₹500 (SOTP-based), implying 13x Sep’25 blended EV/EBITDA.