Shares of JSW Energy increased marginally on Wednesday after declining steadily for the last ten trading sessions. The stock started the trading session positively at ₹298.70 and eventually rose to hit an intraday high of ₹312.80 on the NSE.
It ended nearly 1.38 percent higher at ₹302.05, with 1.2 million shares traded on the NSE and BSE.
The upward movement in the stock comes after JSW Energy sought shareholders' approval to appoint Parth Jindal, son of Chairman and Managing Director Sajjan Jindal, as a director on the company's board.
The e-voting process for the purpose began today and will end on December 22.
Presently, Parth Jindal is MD of JSW Cement Ltd as well as JSW Paints. He is also the founder of JSW Sports.
The stock of JSW Energy started declining after reaching a 52-week high of ₹369 in April of this year and lost nearly 50 percent of its value in just two months to June, reaching a one-year low of ₹182. However, the stock has gained some buying momentum, rising 66.18 percent from its June lows.
Over the last three years, the stock has risen from ₹70.10 to the current level of ₹303.65, generating massive returns of 333.16 percent. In comparison, the Sensex has increased 52.58 percent during the same time period. Over the last five years, the market price of the stock has zoomed by 265.18 percent.
For the September ending quarter, the company posted a 37.30 percent YoY jump in its consolidated net profit of ₹465.7 crore as against a net profit of ₹339.2 crore in the same quarter of the last fiscal. However, sequentially, the net profit was down 16.89 percent.
It reported a 16.04 percent YoY rise in total revenue to ₹2,596.3 crore compared to ₹2,237.4 crore in the same period last year. The company's operating profit fell marginally by 4.31 percent YoY to ₹889.7 crore from ₹929.8 crore and it was down 12.94 percent compared to preceding quarter.
Similarly, the EBITDA margin of the company dropped to 37.26 percent YoY in Q2FY23 from 44.54 percent in Q2FY22, falling by almost 728 basis points (bps).
Finance costs during the quarter (July-September) increased by 7 percent YoY to ₹204 crore from ₹190.9 crore because of additional borrowings due to ongoing growth in capex. The weighted average cost of debt increased by 7 bps QoQ to 7.94 percent.
Meanwhile, JSW Neo Energy, a wholly-owned subsidiary of JSW Energy, has received multiple renewable projects from Indian state governments during the second quarter of this fiscal.
JSW Energy's capacity now stands at 9.2 GW (share of renewables at 66 percent) including 1.75 GW of renewable assets under acquisition from Mytrah and about 2.7 GW of under-construction/in-pipeline wind and hydro projects which are likely to be commissioned in a phased manner, ANI reported.
JSW Energy has set a target to reach 20 GW of capacity by 2030, with the share of renewable energy increasing to 85 percent.
Following the September quarter numbers, analysts maintained a "sell" call on the JSW Energy, citing expensive valuations.
Domestic brokerage firm Elara Securities said JSW Energy enjoys a strong operating cashflow and a comfortable net debt-to-equity ratio, but has maintained its "sell" rating on the stock given expensive valuations and a lack of growth triggers.
Similarly, HDFC Securities has revised its PAT estimates for the company by 8.4 percent and 6.5 percent for FY23 and FY24, respectively. The brokerage said that JSW Energy has one of the strongest balance sheets in the industry with a net debt-to-equity ratio of 0.45x. However, it stated that the valuation at current levels is highly unjustifiable and has given a "sell" call on the stock with a target price of ₹186 per share.
ICICI Securities also maintained a “sell” call on the stock with a target price of ₹236 per share, saying prevailing valuations remain rich.
"The company’s green ventures, especially on the storage front, may result in higher than expected value creation going forward." "JSWEL's venture into polysilicon manufacturing is another development we will be keenly monitoring," the brokerage added.
11 analysts polled by MintGenie on average have a 'sell' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.