CLSA puts 'sell' on JSW Energy

Research: CLSA
Rating: Sell
CMP: Rs 127

CLSA maintains `Sell’ rating on JSW Energy. JSW Energy’s Q1 net profit at Rs 290 crore is in line with our estimates. The company sold 68% power on short-term basis during the quarter. The project cost of Ratnagiri is also set to increase by Rs 600 crore given the additional expenditure to set up a FGD unit. Barmer project site is facing very high turnover of contractors given the very hostile climatic conditions.

Net generation at 1.8m kWh is up 251% y-o-y mainly due to the commissioning of 600 MW at Vijaynagar and 135 MW at Barmer in the last one year. The average realisation fell by 10% to Rs5.09/kWh in Q1 while fuel cost increased by 14% y-o-y to Rs2.34/kWh. CLSA has factored in the delays in commissioning of the Ratnagiri and Barmer projects while they have increased the merchant power assumption to Rs5/kWh. They have also assumed the 300-MW sales to Adani Enterprises from Ratnagiri as merchant in the numbers.
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