The ‘Power Generation’ market has witnessed a huge amount of demand due to a lot of factors, some of which include fast-paced urbanization, increasing population, etc. Herein this article, we will have a glance at one such company engaged in the power generation sector.
JSW Energy Limited, Incorporated in 1994, is a company based in India that is engaged in the process of power generation and transmission in India. The company has operations across various Indian states, some of which include Karnataka, Gujarat, Maharashtra, and many more.
Shares of the company were trading in the green today and closed at Rs 294.30. In the last one-month period, the scrip gained around 18 percent ranging from Rs 249.60 at the start of June 2023 to the current levels.
Having a walkthrough of the consolidated financials reported by the company, the operating revenues as well as net profits, generally referred to as the basic parameters assuring the smooth flow of business, have shown opposing movements in recent periods.
The operating revenues, on one hand, moved up from Rs 8,167 crores during FY21-22 to Rs 10,331 crores in FY22-23, and net profits, on the other hand, have taken a downshift from Rs 1,734 crores to Rs 1,460 crores.
The profitability ratios, due to reducing net profits, have been hit with the return on equity (ROE) decreasing from 9.92 percent during FY21-22 to 7.93 percent in FY22-23. Moreover, the return on capital employed (ROCE) moved down from 11.63 percent to 6.66 percent during the same time horizon.
Having a favourable outlook, Chola Wealth Direct gave a ‘Buy’ recommendation on the stock with a target price of Rs 430 indicating an upside of around 46 percent as compared to the current stock price levels.
The rationale behind such a recommendation is pertaining to the aggressive expansion of capacities, huge amount of entry barriers, safe cash flow scenarios due to long-term tie-ups with government organisations, etc.
As per the shareholding pattern data available for the March 2023 quarter, the Promoters hold a 74.66 percent stake, and Foreign Institutional Investors (FIIs) hold a 5.18 percent stake in the company.
Written by Amit Madnani
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