JSWENERGY - JSW Energy Limited Share Price

Outlook by Management:
JSW Energy's management remains optimistic about India's robust power demand growth, driven by GDP projections (~6.6% FY25, 6.9% Q1 FY26) and rising energy needs. They emphasize a diversified strategy blending thermal, renewable, and storage solutions to ensure energy security and affordability.

Key Points:

1. Growth Targets:

   • Aiming for 10 GW operational capacity by FY25 (8.2 GW currently), with 20 GW by 2030.
   • 28.3 GW "locked-in" capacity (operational + under-construction/acquisitions), including 7.8 GW under construction and 8.3 GW via acquisitions.

2. Strategic Acquisitions:

   • O2 Power (4.7 GW renewables): 2.3 GW operational by June 2025; adds Rs.1,500 crore EBITDA annually (post-commissioning).
   • KSK Mahanadi (3.6 GW thermal): 1.8 GW operational, tied to long-term PPAs; expected to generate Rs.2,600 crore EBITDA (FY24 levels).

3. Renewables & Storage Focus:

   • Prioritizing hybrid/firm, dispatchable renewable energy (FDRE) projects.
   • Pumped Storage (PSP): 12 GWh Maharashtra project secured (40-year PPA). Battery storage (BESS) projects face regulatory delays but remain viable.

4. Financial Resilience:

   • Net debt at Rs.26,500 crore (Dec'24), with Net Debt/EBITDA at 4.5x. Focus on protecting credit ratings amid growth.
   • FY25 capex ~Rs.10,000 crore (revised from Rs.15,000 crore) as inorganic growth accelerates.

5. Sector Challenges:

   • Moderating merchant prices (down 26% YoY) and connectivity/land hurdles for renewables.
   • Confident in resolving regulatory delays (e.g., SECI BESS project appeal in APTEL).

Overall: Management expects strong cash flow from acquisitions and organic projects, leveraging India's energy demand-growth trajectory while balancing thermal and renewable portfolios.

Major Questions and Answers:

1. Question: How do you think about leverage given the two large acquisitions and a very large pipeline of under-construction assets?
   Answer: The company prioritizes maintaining credit ratings and ensures acquisitions align with EBITDA growth to manage leverage. Post-acquisition, net debt-to-EBITDA remains within acceptable limits (4.5x), and equity raises were executed to bolster the balance sheet.

2. Question: What is the plan for KSK Mahanadi's capacity expansion, and what is the status of NCLT for other SPVs?
   Answer: The operational 1.8 GW is tied to long-term PPAs. The remaining 1.8 GW expansion will leverage existing infrastructure for cost efficiency. NCLT processes for other SPVs (water, rail) are advanced, with hearings expected soon.

3. Question: What is the impact of the recent CERC order disallowing payment for infirm power during commissioning?
   Answer: Minimal impact anticipated due to rapid ramp-up capabilities. Learnings from Unit 1 commissioning ensure Unit 2 will achieve COD swiftly. Budgeted commissioning costs remain unaffected.

4. Question: What is the expected EBITDA contribution from O2 Power and KSK Mahanadi by FY27?
   Answer: O2 Power's 2.3 GW operational capacity (mid-2025) will generate ~Rs.1,500 crore annually; full 4.7 GW targets ~Rs.3,750 crore. KSK's FY24 EBITDA was Rs.2,600 crore (public data), with future projections pending acquisition closure.

5. Question: How are transmission and land secured for the 7.8 GW under-construction renewable projects?
   Answer: Majority use state transmission utilities (STU) connectivity, avoiding CTU challenges. Land and connectivity are fully secured, ensuring timely execution as per PPA timelines.

6. Question: How are FDRE project designs evolving with battery storage economics?
   Answer: Shift from co-located hybrids to diversified solutions (wind/solar across states) + storage. Solar+BESS gains traction for evening peak demand, optimizing grid use. States increasingly favor pumped storage for long-duration needs.

7. Question: What caused Mytrah's lower Q3 generation, and will SECI's FDRE VI project (200 MW/4h) transfer post-O2 acquisition?
   Answer: Temporary wind speed dips reduced output; machine availability stayed high. SECI's FDRE VI project (Rs.8.5/kWh tariff) will be added to JSW's portfolio, increasing O2's capacity to 4.9 GW.

8. Question: What is the capex spent in 9M FY25, and what is the FY26 outlook?
   Answer: Rs.6,200 crore spent in 9M FY25; full-year capex revised to ~Rs.10,000 crore (vs. Rs.15,000 crore earlier). FY26 guidance to be provided post-annual planning, with inorganic growth easing organic execution delays.

9. Question: Explain KSK Mahanadi's ownership structure and treatment of cash held by subsidiaries.
   Answer: Lenders hold 26% equity with a put option exercisable after 1 year. Pre-acquisition cash flows (including subsidiaries) belong to lenders; post-acquisition strategy for residual stake pending discussions.

10. Question: Detail BESS project economics (250 MW/500 MWh): capex, battery type, and revenue model.
    Answer: Projects follow BOOT models with 12-year terms. Revenue is fixed capacity charges (Rs.10.8 lakh/MW/month). Lithium-ion batteries used; repowering every 4"“5 years maintains 70% capacity post-12 years. Capex specifics depend on design and location.

11. Question: Clarify O2 Power's balance capex (Rs.13,000"“14,000 crore) and KSK's pending expansion costs.
    Answer: O2's 2.4 GW under construction requires Rs.13,000"“14,000 crore, per prior disclosures. KSK's 1.8 GW expansion costs are below greenfield benchmarks due to existing infrastructure; exact figures pending acquisition closure.