JSW Energy is a beneficiary of the growing power demand that is driven by increasing population, urbanisation and industrialisation and the emergence of new data drivers like EVs and data centres

JSW Energy stock gave 22.6% return in last one year but will outperformance continue? Here's what analysts say Should you buy it now?

Power sector company JSW Energy has reported stable cash flows and healthy profitability over the last few years aided by a strong operating track record of its thermal power plants, long-term power purchase agreements and an increase in short-term tariffs. It has a diversified presence across thermal, hydro and renewable power generation, power transmission and power trading. The management aims to increase its installed capacity from 7.7 GW (current capacity) to 20 GW by 2030.

While most analysts are confident about the long-term growth, the stock price went into a tailspin after the recent CERC order. The stock has lost over 15% since 2 January 2025 after the CERC refused to approve the proposed tariff for a battery storage project that the company bagged from Solar Energy Corporation of India in January 2023. The volatility may persist for some time but given its strong business profile, the correction offers a good buying opportunity.

JSW Energy is a beneficiary of the growing power demand that is driven by increasing population, urbanisation and industrialisation and the emergence of new data drivers like EVs and data centres. It expects peak power demand to grow at a CAGR of 6% between 2022-23 and 2029-30. Around 55% of the company’s current installed capacity is renewable and it aims to enhance renewable capacity to 66% of its total installed capacity by 2030. The recent announcement of the acquisition of O2 Power (through its subsidiary, transaction to be completed in May 2025) will strengthen its RE portfolio by adding capacity and will provide cost synergies in O&M (operations and maintenance). The acquisition will also create a good blend of solar, wind and FDRE portfolio.

It also enjoys an early mover advantage in the new-age business space and focuses on new energy solutions like energy storage, green hydrogen, and derivatives like ethanol, methanol, and SAF. A recent Axis Securities report lists the company’s diversified business, aggressive expansion targets, and strong execution skills as reasons for its premium valuations and estimates a 32% CAGR in PAT over 2023-24 and 2026-27.

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Furthermore, the company has also made several other strategic acquisitions to sustain its growth momentum. Such acquisitions include Barath in December 2022 and Mytrah Energy in March 2023. It also emerged as the highest bidder for the thermal assets of KSK Mahanadi in October 2024 (transaction subject to statutory approval).

Focus on operating efficiency, a robust balance sheet and healthy debt metrics are the key strongholds of the company. The stock significantly outperformed the market benchmark in the last one year with 22.6% returns compared to BSE Sensex with 8.7% returns.

Selection methodology: We pick the stock that has shown the maximum increase in ‘consensus analyst rating’ during the past three months. The consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (1 for strong buy, 2 for buy, 3 for hold, 4 for sell, 5 for strong sell). An improvement in consensus analyst rating indicates that the analysts are getting bullish on the stock. Only stocks with more than five analysts covering them are considered. You can see similar consensus analyst rating changes during the past week in ETW 50 table.

This story originally appeared on: India Times - Author:Faqs of Insurances