How savvy deals propelled JSW Energy forward

Three years ago, JSW Energy’s market capitalization was a third that of Tata Power Co. Ltd and three-fifths that of Adani Power Ltd. Tata Power’s and Adani Power’s installed power generating capacities then were 2.7 times and 1.7 times bigger, respectively, than JSW Energy’s.

With its latest 500 megawatt (MW) power plant purchase, JSW Energy’s capacities have almost doubled from back then. Tracking the rise, the company’s market value has jumped 90% during the period to Rs.13,333 crore. Capacities at Tata Power and Adani Power also rose. But unlike JSW Energy, market caps of these companies fell in the range of 13-18%.

JSW Energy’s market cap is now greater than that of Adani Power, despite the latter having higher generation assets. Similarly, Tata Power market cap is now only 42% higher than JSW Energy. The changes reflect the hurdles these companies hit, while JSW Energy was lucky to avoid non-remunerative power purchase agreements (PPAs).

Also, acquisitions or capacity additions did not push JSW Energy to the brink financially. It reported annual profits in each of the last three fiscal years while Adani Power managed to avoid loss only in the previous year. In fact, JSW Energy is one of the few private firms to consistently generate double digit return ratios in recent years.

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