Jefferies has turned more constructive on JSW Energy after its Rs 3,150 crore stake sale in JSW Steel to GQG and SBI Mutual Fund, saying the transaction should help improve leverage metrics and support the company’s aggressive capacity expansion plans. The brokerage raised its target price on JSW Energy to Rs 675 from Rs 660, implying a potential upside of 31% from current market levels.
In an exchange filing, JSW Energy said it sold 25 crore equity shares of JSW Steel on the NSE on May 18 as part of a strategic liquidity release. Following the transaction, the company will continue to hold 4.5 crore shares in JSW Steel.
Jefferies said the monetisation is expected to bring down net debt-to-EBITDA to 5.7x in FY27 from 6x earlier, with the ratio further declining to 5.2x by FY30. The brokerage added that it has lowered its absolute interest cost estimates for FY27 to FY30 by 1% to 3%, factoring in the possibility that part of the proceeds will be utilised for capex instead of additional borrowing.
The brokerage now expects net debt-to-equity at 2.2x in FY27, compared to its earlier estimate of 2.3x before the stake sale. It also expects leverage levels to remain stable through FY30 despite significant planned capacity additions.
Jefferies noted that a large portion of the upcoming capacity is tied to power purchase agreements, improving visibility and predictability of EBITDA growth between FY26 and FY30. The share of merchant capacity is expected to reduce steadily to 3% in FY28 from 9% in FY25, and further decline to 2% by FY30.
The brokerage believes improved execution could become a key positive for the stock after the company missed its FY26 guidance. JSW Energy added only 2.6 GW of capacity in FY26 against its guidance of 3 GW to 5 GW and Jefferies’ estimate of 3.1 GW, with the company attributing the shortfall to evacuation-related issues.
For FY27, Jefferies has factored in 2.2 GW of additions, including spillover projects from FY26. So far this fiscal, JSW Energy has added 130 MW of wind capacity, 69 MW of solar capacity and 50 MW of hydro assets. Management has reiterated confidence in achieving 3 GW of capacity addition for the full year.
Jefferies said stronger execution could help restore investor confidence after the FY26 miss and potentially trigger a re-rating in the stock. Management remains confident of achieving 30 GW capacity by 2030, while Jefferies’ estimates currently stand at 24.7 GW.
In January 2026, JSW Energy signed a second power purchase agreement with the West Bengal discom for an additional 1.6 GW thermal capacity at Salboni, over and above the 1.6 GW already under construction. This has taken the company’s total locked-in generation capacity to 32.1 GW.
Jefferies expects JSW Energy to deliver an EBITDA CAGR of 17% between FY26 and FY30. The revised target price of Rs 675 is based on 14x FY28E EV/EBITDA. The brokerage noted that the valuation remains near the lower end of the 15x-20x range at which the stock traded following its 2010 listing, when visibility around capacity expansion had doubled. The brokerage, however, flagged delays in project execution and aggressive bidding as key risks.
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JSW Energy reported a consolidated net profit of Rs 574 crore for the March quarter, up 38% from Rs 414 crore in the year-ago period. Revenue for Q4FY26 rose 41% year-on-year to Rs 4,499 crore, compared to Rs 3,189 crore in the corresponding quarter last year.
Shares of the company rose over 2% to their day’s high of Rs 538 on the BSE on Tuesday. JSW Energy shares have risen 7% so far in 2026, while gaining a modest 4% over the last one year.
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