Why is the JSW Energy Share Price Falling?

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Shares of JSW Energy Ltd slipped 10% after Q3 came in below expectations. According to Axis Securities, the company missed its revenue, EBITDA, and PAT estimates. The brokerage reduced its price target to ₹770 per share from ₹800 but maintained its buy call on the stock. Consolidated net sales stood at ₹2,439 crore, down 4%/25% YoY/QoQ, missing estimates by 8%. The lower revenue was due to lower short-term realisation at the Ratnagiri and Vijayanagar plants and lower tariffs at the hydro plants, resulting from a change in depreciation policy in line with CERC tariff regulations. The global brokerage said EBITDA in Q3 was sharply lower than expectations due to lower merchant prices and flat fuel costs.  

Key Reasons for Declining in the Share Price of JSW Energy

 There are several reasons behind the fall in JSW Energy shares. The main reason for the decline in JSW Energy’s share price is its weak fundamentals, including poor operational efficiency, low sales growth, and high debt levels. According to Axis Securities, the company missed its revenue, EBITDA, and PAT estimates. The brokerage reduced its price target to ₹770 per share from ₹800 but maintained its buy call on the stock.   

Below are the reasons for the decline in the share price of JSW Energy 

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• Inefficient Management: The Return on Capital Employed (ROCE) has fallen to 7.34%, highlighting poor management efficiency and profitability.
• High Debt: JSW Energy has faced challenges due to its high debt-to-EBITDA ratio of 4.71x, which places a significant burden on the company’s ability to service its debt. The net profit margin for the quarterly financials is 14.45% .
• Underperformance: JSW Energy’s share price underperformed, with a negative return of 29.05%, reflecting the company’s profit.
• Decreased sales growth: JSW Energy has recorded a low 7.26% sales growth rate over the past five years, further eroding its sales growth.
• Potential Equity raise: Some analysts’ reports suggest the company needs to raise equity for financial planning and organic growth, as well as to support its recent acquisitions.
• Impact of Q3 Results: The global brokerage said EBITDA in Q3 was sharply lower than expectations, due to lower merchant prices and flat fuel costs. Shares of HSW Energy Ltd slipped 10% after Q3 came below expectations. According to Axis Securities, the company missed its revenue, EBITDA, and PAT estimates.   

JSW Energy Limited : An Overview

 JSW Energy Limited is an Indian power company engaged in power generation, transmission and trading. JSW has raised a $900 million syndicated loan from a consortium of eight foreign banks. In December 2024, JSW Group entered the non-ferrous metals sector by adding copper to its metal portfolio through the acquisition of two Jharkhand copper mines from Hindustan Copper. JSW Energy has a power business interest in developing infrastructure for ports, roads, and rail connectivity. The company has a cargo-handling capacity of 153 MT. According to the recent statutory filing, the promoter, Sajjan Jindal Family Trust, sold equity shares of the company worth ₹1200 crores.

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JSW Energy: Performance Analysis

The market capitalisation of JSW Energy is ₹94,0049 crore. The revenue of JSW Energy is ₹5.14,000 crore, with the net income of ₹743.12 crore, Diluted EPS of 4.25, and an increase in the net profit margin of 14.45%. The P/B Ratio of JSW Energy is 3.4%, the TTM operating revenue growth is 22.5%, and the P/E Ratio has increased by 43.6%. Institutional holding is nearly a holding of 23.8%, and growth in net profit is approximately 42.4%.   

Growth Prospects and Positive Factors: A Future Anticipation

The 16 analysts offering 1-year price forecasts of JSW Energy Limited have a maximum estimate of 726.00 and a minimum estimate of 435.00. As per analysts report the average share price target of 630.67. The consensus estimate represents an upside of 15.84% from the last price of 544.45. 

What is the Right Time to Buy JSW Energy Shares?

According to analysts, the share price of JSW Energy Shares is determined by market factors. Currently, the share price has decreased due to internal company reasons, as discussed above. Therefore, investors must review all factors before investing in JSW Energy. There are some factors to consider before investing in JSW Energy shares:

•  Financial Statements: Investors must analyse the financial statements of the company before investing in JSW Energy, as they need to review the company’s fundamentals to make an informed decision. 
• Valuation & Market Expectations: JSW Energy primarily offer shares at a premium valuation due to their profitability and goodwill; therefore, investors must consider the holding company discount.
• New Energy Transition & Capex: The primary investment of JSW Energy is primarily in green hydrogen, solar, and battery manufacturing, which also impacts the company’s investment capacity. 
• Government Regulation: Always consider government regulations before investing in JSW Energy, as the government’s regulations can be flexible, allowing investors to make informed decisions.  

How to Invest in the JSW Energy Shares?

Investors shall follow the steps given below for investing in JSW Energy shares:

Step 1: Investors should evaluate the reasons behind the investment and assess the optimal method for investing.

Step 2: Research the top diversified sectors of JSW Energy Shares to make informed decisions. 

Step 3: To generate the higher returns, choose the best shares to grow fundamentally.

Step 4: Open the demat account on the Univest App and place a buy order for the quantity of stocks you wish to purchase.

Step 5: Execute the order and start tracking your portfolio from the Univest App from day one to identify the proper exit position for profit booking.

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Conclusion

In the broader market context, the stock’s performance has been notably worse than the benchmark, with a year-to-date-decline of 16.73% compared to the Sensex’s gain of 4.58%. Over the past year, JSW Energy has underperformed significantly, with a return of -32.22% against the market’s -3.77%. This stark contrast highlights the challenges the company faces, particularly in terms of management efficiency and debt levels, which may deter potential investors despite some positive indicators such as rising investor participation and healthy long-term growth in operating profit. 

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FAQs

What are the key reasons of falling in the JSW Energy shares?

Ans. There are several reasons behind the fall in JSW Energy shares. The main reason for the decline in JSW Energy’s share price is its weak fundamentals, including poor operational efficiency, low sales growth, and high debt levels. According to Axis Securities, the company missed its revenue, EBITDA, and PAT estimates. JSW Energy has faced challenges due to its high debt-to-EBITDA ratio of 4.71x, which places a significant burden on the company’s ability to service its debt. The net profit margin for the quarterly financials is 14.45% .

What are the future anticipations for JSW Energy shares?

Ans. The 16 analysts offering 1-year price forecasts of JSW Energy Limited have a maximum estimate of 726.00 and a minimum estimate of 435.00. As per analysts report the average share price target of 630.67. The consensus estimate represents an upside of 15.84% from the last price of 544.45. 

What are the factors affecting the JSW Energy Shares?

Ans. Investors must analyse the financial statements of the company before investing in JSW Energy, as they need to review the company’s fundamentals to make an informed decision. JSW Energy primarily offer shares at a premium valuation due to their profitability and goodwill; therefore, investors must consider the holding company discount.

What are the performance analysis of the JSW Energy Shares?

Ans. The market capitalisation of JSW Energy is ₹94,0049 crore. The revenue of JSW Energy is ₹5.14,000 crore, with the net income of ₹743.12 crore, Diluted EPS of 4.25, and an increase in the net profit margin of 14.45%. The P/B Ratio of JSW Energy is 3.4%, the TTM operating revenue growth is 22.5%, and the P/E Ratio has increased by 43.6%. Institutional holding is nearly a holding of 23.8%, and growth in net profit is approximately 42.4%.   

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