JSW Energy — Q3 FY25 earnings call

Call held 28 Jan 2025

Management summary

JSW Energy reported a mixed Q3 FY25, with strong generation growth driven by renewables and strategic acquisitions significantly expanding its capacity pipeline to 28.3 GW. However, profitability saw a YoY decline due to lower short-term realizations and a regulatory setback for a key BESS project. The company is actively pursuing inorganic growth while managing its debt profile and aiming for 10 GW capacity by FY25.

Highlights

  • Net generation increased 10% YoY to 6.8 billion units in Q3 FY25, driven by 18% YoY renewable growth.

  • Acquisition of O2 Power (4,696 MW for ₹12,468 crores) and Hetero Labs/Drugs (125 MW for ₹630 crores) significantly expanded capacity.

  • Secured Letter of Intent for KSK Mahanadi (3,600 MW thermal), with 1,800 MW already tied up via long-term PPAs.

  • Total locked-in generation capacity reached 28.3 GW, including 7.8 GW under construction with signed PPAs.

  • Thermal PLF stood at 72% in Q3 FY25, outperforming the national average of 66.7%.

Concerns

  • EBITDA for Q3 FY25 was ₹1,115 crores, down 9% YoY, primarily due to lower short-term realization and lower hydro tariff.

  • Profit after tax for Q3 FY25 was ₹168 crores, down 27% YoY.

  • Net debt increased sequentially by ₹1,575 crores to ₹26,500 crores at December end, with Net Debt to TTM EBITDA at 4.5x.

  • CERC has not allowed tariff adoption for the 1 GWh SECI BESS project, leading to an appeal and project hold.

Key financials

3 periods

Headline

  • Net Debt (Dec 2024)
    ₹26,500 Cr
  • Net Debt to TTM EBITDA
    4.5×

Q3 FY25

  • Net Generation
    6.8 billion units
    YoY +10%
  • EBITDA
    ₹1,115 Cr
    YoY -9%
  • PAT
    ₹168 Cr
    YoY -27%
  • Thermal PLF
    72%

9M FY25

  • EBITDA
    ₹4,600 Cr
  • PAT
    ₹1,543 Cr
    YoY +12%

What they filed

Q1 FY27: revenue up 20.2%, net profit up 16.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue967 977 946 916 780 −19%695 −29%639 −32%1,101 +20%
EBITDA250 305 277 303 259 +4%244 −20%209 −25%296 −2%
Net profit286 217 464 162 190 −34%65 −70%442 −5%188 +16%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

28.3 GW

as of 2024-12-31 quantified

Composition

Mix 3 others
  • Under-construction with signed PPAs (beyond 10 GW) 7.8 GW 39%
  • Capacity expecting PPAs soon 3.9 GW 19.5%
  • Capacity under acquisition 8.3 GW 41.5%

Share of order book by other, derived from disclosed amounts

Pipeline

other

3.9 GW of capacity where PPAs are expected to be signed soon.

The company has significantly expanded its locked-in generation capacity through strategic acquisitions and a robust under-construction pipeline, aiming for 20 GW by 2030.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹10,000 Cr Cut — current batch of projects getting completed and shift to inorganic growth

    Previously planned ₹15,000 Cr

    So, Nikhil, for the first 9 months, the total capex has been spent is about 6,200 cr. And we are expecting to end the full year with close to ₹ 10,000 cr. If you recall, earlier, we had said we were expecting a₹15,000 cr total capex for the year. But of course, the current batch of projects that we are planning to complete are getting completed. And we had anticipated a higher amount of investment in the organic future projects.
  • Debt Net ₹26,500 Cr · 4.5× EBITDA Cost 8.9%
    • New borrowing Sequential increase in net debt ₹1,575 Cr
    the net debt at the end of December stood at about 26,500 cr with a cash-on-cash equivalents just shy of ₹5,000 cr. This is a sequential increase in net debt by about 1,575 cr. The leverage ratio continues to be healthy. We reported a Net Debt to TTM EBITDA of 4.5x.
  • M&A O2 Power Acquisition · Signed · Consideration ₹[object Object] (undisclosed) · AUM 4,696 MW

    Enhance renewable energy portfolio and footprint, accelerate capacity addition.

    Expected to generate ₹1,500 crores EBITDA for 2.3 GW operational capacity and ₹3,750 crores for 4.7 GW.

    On 27th of Dec 2024, we announced the acquisition of O2 Power, a leading renewable energy platform with a capacity of 4,696 MW. This acquisition valued at 12,468 crores marks a significant milestone for JSW Energy.
  • M&A Hetero Labs and Hetero Drugs Ltd. (Wind Project) Acquisition · Closed · Consideration ₹[object Object] (undisclosed) · AUM 125 MW

    Expand wind capacity.

    Blended tariff of 5.22 per unit.

    On 10th January 2025, we have also completed the acquisition of a 125 MW wind project from Hetero Labs and Hetero Drugs Ltd. at an enterprise valuation of approximately 630 crores.
  • M&A KSK Mahanadi Power Company Acquisition · Announced · AUM 3,600 MW

    Acquire a 3,600 MW thermal power plant in Chhattisgarh, ensuring reliable power supply and generating cash flows from day one.

    Historical EBITDA for 3.6 GW was ₹2,600 crores in FY24. 95% of 1,800 MW operational capacity is tied up with long-term PPAs.

    In another strategic move, we had bid for KSK Mahanadi Power Company under IBC proceedings, and we have now received a Letter of Intent for a 3,600 MW thermal power plant in Chhattisgarh near the coal belt.
  • Liquidity Cash ₹5,000 Cr
    the net debt at the end of December stood at about 26,500 cr with a cash-on-cash equivalents just shy of ₹5,000 cr.

Guidance & targets

Capacity

  • Total installed capacity Capacity · by the end of FY25 · High confidence 10 GW
    We are on track to reach 10 GW of capacity by the end of FY25.

    — Sharad Mahendra

  • Total installed capacity Capacity · before FY2030 · High confidence 20 GW
    Now to give the update on projects beyond the 10 GW, to reach 20 GW before FY2030, our total under-construction capacity stands at 7.8 GW with signed PPAs, which is beyond 10 GW

    — Sharad Mahendra

  • O2 Power operational capacity Capacity · by June '25 · High confidence 2.3 GW
    O2 Power's assets are spread across 7 resource-rich states with 2.3 GW of the capacity to be operational by June '25

    — Pritesh Vinay

Profitability

  • O2 Power EBITDA (2.3 GW operational) Profitability · annualized run rate · High confidence ₹1,500 crores
    Then on an annualized run rate basis, that portfolio will generate about 1,500 crores of EBITDA.

    — Pritesh Vinay

  • O2 Power EBITDA (4.7 GW operational) Profitability · steady-state run rate · High confidence ₹3,750 crores
    where it goes to the 4.7 GW, the expected steady-state EBITDA run rate is about 3,750 crores.

    — Pritesh Vinay

Project Completion

  • PSP project completion Project Completion · starting Oct 2024 · High confidence 48 months
    We have 48 months starting on Oct 24 to complete the project.

    — Sharad Mahendra

Returns

  • Green Hydrogen project equity IRR Returns · amortized over 7 years · High confidence 15%
    is that the modality that has been worked on is that we will get a 15% equity IRR on this project, which is to be amortized completely over a period of 7 years.

    — Pritesh Vinay

What to watch in Q4 FY25

FY26 capacity addition guidance

next quarter (May 2025)
Current Not yet provided
Target Specific MW target for FY26

Why it matters

This will provide clarity on the company's organic growth trajectory beyond the current FY25 targets and acquisitions.

when we come back in the month of May with the annual results, having gone through an annual business planning exercise, we will be able to give an FY26 capacity addition guidance and then the balance will be basic arithmetic for you.

Risks & concerns

  • CERC order not allowing tariff adoption for BESS project

    medium

    CERC order on Jan 2, 2025, did not allow tariff adoption for the 1 GWh SECI BESS project, citing misalignment with market prices due to SECI's delay in signing agreements. Company has appealed to APTEL.

    Management acknowledged

  • Connectivity and land acquisition challenges for renewable projects

    low

    Industry-wide challenge, but JSW Energy claims to have addressed this for its 7.8 GW PPA-backed pipeline, with significant portion using STU connectivity within states.

    Management downplayed

  • Wind speed variability impacting generation

    low

    A slight dip in Mytrah generation in Q3 was due to lower wind speeds, but it's temporary with no lasting impact and high machine availability (98-99%).

    Analyst downplayed

Q&A highlights

6 direct
Impact of CERC order on infirm power for newly commissioned plants Direct
See, yes, this new regulation which has come, it is not going to have any significant impact because we have to see what it says that there is a ramp-up of the unit, and whenever we are working on the project, the entire process that has in case of Ind-Barath, there has been a very good learning while ramping up to full capacity, the first unit. And we are in a position to ramp this unit to full capacity and demonstrate for 72 hours.

Addresses concerns about potential revenue loss for newly commissioned plants like Ind-Barath Unit 2 due to a CERC order, with management stating minimal impact due to quick ramp-up capabilities.

Asked by Rajesh Majumdar

EBITDA contribution from O2 Power and KSK Mahanadi acquisitions Direct
O2 Power we kind of have guided a steady-state EBITDA. When we go to a 2.3 GW operational capacity... that portfolio will generate about 1,500 crores of EBITDA. ...where it goes to the 4.7 GW, the expected steady-state EBITDA run rate is about 3,750 crores. ...KSK, historical number is available last financial year in fiscal 2024, they had done an EBITDA of INR2,600 crores.

Provides specific financial guidance for the acquired assets, crucial for understanding the impact on future profitability and validating the acquisition rationale.

Asked by Rajesh Majumdar

Transmission evacuation and land for 7.8 GW PPA-backed projects beyond 10 GW target Direct
Yes. Sumit, a very a relevant point because everyone is questioning about the connectivity and land, which the industry is facing challenge, but we acted upon and majority of the capacity, the PPAs which we are trying, we are fully ready, whether it is land or connectivity. And to overcome the connectivity issue, the significant portion of this total 7.8 GW is within the state for the same state through the STU connectivity, which is available in most of the states.

Addresses a critical sector-wide constraint (grid connectivity and land acquisition) and clarifies how JSW Energy is mitigating this risk for its substantial project pipeline.

Asked by Sumit Kishore

Impact of CERC order on 1 GWh SECI BESS project and its future Direct
However, on 2nd January 2025, the current year, CERC, in its order, has not allowed tariff adoption, observing that the proposed tariff is not aligned with the prevailing market prices due to a delay by SECI in signing the Battery Energy Storage Purchase Agreement... We have appealed against the order in APTEL, and we are confident that this will be looked at because there are a lot of precedents in this area of such tariff adoptions, tariffs being adopted earlier. So we have appealed, and we are waiting for the outcome.

Highlights a significant regulatory hurdle for a key energy storage project and the company's legal recourse, indicating potential delays and uncertainty for this strategic initiative.

Asked by Sumit Kishore

Reason for dip in Mytrah generation in Q3 Direct
See, there is a slight dip in Mytrah generation, which is basically because of the wind speeds which were slightly lower than what was expected, but that is very temporary and short term. we don't see any lasting impact of that, but machine availability wise, there was no challenge, the machine availability continues to remain at almost close to 98% to 99%.

Clarifies that the generation dip was due to temporary natural factors (wind speeds) rather than operational issues, reassuring investors about asset health.

Asked by Nikhil Abhyankar

KSK Mahanadi: Lender's 26% stake and company's plan to acquire it Direct
No, no. 26% will stay with the lenders, but there is a put option with the lenders, which will get active after 1 year and within 1 to 5 years, they have a right to exercise that put. And obviously, no lender has a strategic intent to remain a minority equity investor in a non-core business. So, their idea is to maximize their recovery and recoup all the losses of the past.

Explains the ownership structure post-acquisition and the clear path for JSW Energy to eventually acquire the remaining minority stake from lenders, providing long-term clarity.

Asked by Saket Yadav

Pending capex required to operationalize the balance 1.8 GW of KSK Mahanadi Partial
But balance of the plant, most of the balance of the plant is ready for entire 3,600 MW, whether it is the transmission evacuation line or whether it is the water pipeline. And even there are 3 more units which have become one of the units more than 40% of the work is complete, Balance of other 2 units also part work is complete. So it will be at a significantly lower cost per MW capex at which the plant will be fully operational then the benchmark greenfield cost for 1.8 GW. So this is what we can say, giving the exact numbers, maybe at the right time, we will come back.

Management confirms that significant balance of plant work is already complete, implying lower incremental capex for the remaining 1.8 GW, but defers specific numbers to a later date.

Asked by Ritwik Sheth

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Detailed narrative

Q3 FY25 Operational and Financial Performance

JSW Energy reported a 10% YoY increase in net generation to 6.8 billion units for Q3 FY25, driven by an 18% rise in renewable generation. Thermal assets achieved a Plant Load Factor (PLF) of 72%, surpassing the national average of 66.7%. However, EBITDA for the quarter declined 9% YoY to ₹1,115 crores, and Profit After Tax (PAT) fell 27% YoY to ₹168 crores, primarily due to lower short-term realizations and a reduced hydro tariff. For the nine months ended December 2024, PAT grew 12% to ₹1,543 crores, while EBITDA remained largely flat at ₹4,600 crores.

Strategic Acquisitions and Capacity Expansion

The company made significant strides in inorganic growth, acquiring O2 Power, a 4,696 MW renewable energy platform, for ₹12,468 crores. This includes 2.3 GW expected to be operational by June 2025, projected to generate ₹1,500 crores in annual EBITDA, with the full 4.7 GW expected to yield ₹3,750 crores. Additionally, JSW Energy acquired a 125 MW wind project from Hetero Labs and Hetero Drugs for ₹630 crores. A Letter of Intent was also received for the acquisition of KSK Mahanadi Power Company, a 3,600 MW thermal plant, with 1,800 MW already tied up under long-term PPAs.

Renewable Energy Pipeline and Connectivity

JSW Energy's total locked-in generation capacity now stands at 28.3 GW. This includes 7.8 GW of under-construction capacity with signed Power Purchase Agreements (PPAs) and an additional 3.9 GW where PPAs are expected soon. The company emphasized that for its 7.8 GW pipeline, land and connectivity challenges, prevalent in the industry, have been addressed, with a significant portion utilizing State Transmission Utility (STU) connectivity. The company is on track to achieve 10 GW capacity by the end of FY25 and aims for 20 GW by FY2030.

Energy Storage Solutions and Regulatory Challenges

The company is progressing on its 12 GWh Pumped Storage Project (PSP) at Bhavali, with a PPA signed and a 48-month completion timeline from October 2024. However, the 1 GWh SECI Battery Energy Storage System (BESS) project faces a regulatory hurdle as CERC has not allowed tariff adoption, citing misalignment with market prices. JSW Energy has appealed this order to APTEL, expressing confidence in a favorable outcome given past precedents.

Capital Expenditure and Debt Profile

For the first nine months of FY25, JSW Energy incurred a capital expenditure of ₹6,200 crores, with the full-year FY25 capex now projected to be ₹10,000 crores, revised down from an earlier estimate of ₹15,000 crores due to the completion of current projects and a shift towards inorganic growth. Net debt at the end of December 2024 stood at ₹26,500 crores, a sequential increase of ₹1,575 crores, resulting in a Net Debt to TTM EBITDA ratio of 4.5x. The weighted average interest cost remained healthy at below 8.9%.

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