MOSL: JSW ENERGY (Neutral)-Higher merchant rates drive strong performance-Net debt reducing-EV remains an overhang
JSW Energy: Higher merchant rates drive strong performance; Net debt reducing; EV remains an overhang; Maintain Neutral
(JSW IN, Mkt Cap USD1.6b, CMP INR68, TP INR73, 8% Upside, Neutral)
JSW Energy (JSWE) had a solid quarter on back of strong merchant realization. EBITDA increased 26% YoY to INR7.4b (our est. of INR5.8b). Interest cost declined 13% YoY / 4% QoQ to INR2.9b as FCF was used to repay debt. Other income was down ~20% YoY to INR0.7b. Reported PAT increased from INR0.5b in 3QFY18 to INR1.5b in 3QFY19.
- Generation increased 3.5% YoY to 5.1BU. Revenue increased 21% YoY to INR24.2b.
- Standalone realization increased 17% YoY / 3% QoQ to INR5.04/kWh, while fuel cost increased by ~14% YoY / down 4% QoQ to INR3.7/kWh. This resulted in standalone EBITDA increasing 71% YoY to INR3.1b (INR1.05/kWh margin) - a key driver of the strong performance and beat to estimates.
- Merchant rates in the quarter were boosted by strong growth in electricity demand and shortage of domestic coal. JSWE's merchant sales increased ~3x QoQ to 1.1BU.
- Reported net debt was down INR2.9b QoQ to INR107b as JSWE continues to pay down its debt.
JSW Energy is primarily engaged in the business of generation of power, operation and maintenance of power plants, trading in power and mining related activities.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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