Buy JSW Energy; target of Rs 675: ICICI Securities

Key Investment Pillars

• JSW Energy is transitioning into a RE-dominant player, with a presence across RE assets, supported by backward integration of wind turbine blade manufacturing, utility-scale power storage systems, and boiler parts manufacturing for thermal expansion.
• The company has a clear visibility for its 30GW target runway, with only 3.8GW of the deficit without PPAs, and H1 RE additions of 1.4GW bode well for the FY27 target of 3GW.
• Better operating efficiencies, attractive PPA tariffs, and opportunistic merchant sales have started showing in earnings, with Q2FY27 EBITDA/PAT expanding 21%/50% YoY.
• The company benefits from demand from its group companies looking to reduce their carbon emissions, and is aiming to set up >30GW of generation capacity and a storage capacity of 40GWh by 2030.

Thesis Validation Checklist

To validate the analyst's thesis, investors should watch for the pace of organic capacity additions, the ability to secure new PPAs, and the execution of under-construction projects, as well as the company's ability to maintain its operating efficiencies and merchant sales. Key risks include delays in execution, new wins in RE bids, and changes in merchant prices and volumes.