Shares of JSW Energy witnessed a significant surge on Monday, climbing as much as 8% during early trading hours. The sharp rise followed the announcement of the company’s entry into the renewable energy sector through the acquisition of O2 Power. At its peak, JSW Energy shares reached ₹673.05, propelling its total market capitalization beyond ₹1.17 lakh crore.
This recent performance places JSW Energy’s stock approximately 67% higher than its 52-week low of ₹404, achieved in January 2024. However, it remains 17% below its 52-week high of ₹804.95, recorded in September 2024.
JSW Energy’s Foray Into Renewable Energy
The leap in JSW Energy’s share price comes after its wholly-owned subsidiary, JSW Neo Energy, signed a definitive agreement to acquire O2 Power. This renewable energy platform was jointly established by Swedish asset manager EQT Partners and Singapore’s Temasek Holdings.
The acquisition includes O2 entities with a consolidated operational and under-construction renewable energy portfolio of 4.7 GW. The transaction is valued at an enterprise valuation of ₹12,468 crore (approximately $1.47 billion) after adjustments for net current assets.
Details of the Acquisition
The acquisition involves purchasing O2 Power Midco Holdings and O2 Energy SG, subject to approval by the Competition Commission of India (CCI) and other customary regulatory approvals. In its filing, JSW Energy disclosed that O2 Power entities reported a cumulative revenue of ₹538 crore for FY24.
This move aligns with JSW Energy’s strategy to strengthen its position in the renewable energy sector. With the acquisition, the company adds substantial capacity to its portfolio, cementing its transition from traditional energy sources to sustainable power solutions.
Stock Performance Analysis
Shares of JSW Energy have displayed resilience and growth:
- 52-week low: ₹404 (January 2024)
- 52-week high: ₹804.95 (September 2024)
- One-month performance: Flat
- Six-month performance: Down by 13%
Despite recent fluctuations, the stock’s positive outlook is fueled by its expansion into renewable energy, a sector expected to see exponential growth in the coming years.
Brokerage Insights and Target Price
Motilal Oswal Financial Services expressed optimism about JSW Energy’s latest acquisition. The brokerage appreciates the quality of assets acquired and has valued JSW Energy’s core business at 15 times FY27 EBITDA, citing the company’s robust operational performance and strong market positioning.
Additionally, Motilal Oswal applied a 25% discount to the current market price of JSW Steel, in which JSW Energy holds a stake. Factoring in these components, the brokerage set a target price of ₹810 per share.
Potential Upside:
Motilal Oswal highlighted an additional option value of ₹60 per share from the KSK Mahanadi project, which is expected to materialize once the deal is finalized.
What This Means for Investors
The acquisition of O2 Power not only positions JSW Energy as a leading player in the renewable energy space but also reinforces its commitment to sustainable growth. With strong fundamentals and the backing of positive brokerage reports, JSW Energy remains an attractive investment for those seeking exposure to India’s evolving energy sector.
Disclaimer
This article is for informational purposes only and should not be considered as investment advice. Readers are encouraged to perform their own research or consult with a financial advisor before making any investment decisions.
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