JSW Energy share price rises 8% as firm to acquire O2 Power’s green energy platform

Stock Market Today: JSW Energy share price gained almost 8% in morning trade on Monday as it announced plans to acquire a 100% stake in O2 Power Midco Holdings, O2 Energy SG Pte and their subsidiaries.

JSW Energy share price opened at ₹650.20 on the BSE on Monday, more than 5% higher than its previous close of ₹625.05. JSW Energy share price thereafter rose to the day's highs of ₹673.05, marking gains of almost 8%.

JSW Energy on Friday pot market hours announced that JSW Neo Energy, a wholly-owned subsidiary of the company, has agreed to acquire 100% interest in O2 Power Midco Holdings Pte Limited and O2 Energy SG Pte Limited and their subsidiaries, having a consolidated operational and under construction /development renewable energy portfolio of 4.7 GW in India.

Revenue from operations (cumulative) in FY 2023-24 for the company stood at ₹538 crore (audited), as per JSW Energy's press release. JSW Energy said that the acquisition would help the company in achieving its renewable-led capacity growth target of 20 GW before FY 2030.

Analysts Views

JSW Energy has been shifting gears towards renewable energy (RE) over the last couple of years, as is evidenced by their locked-in RE portfolio of 15.3GW at end-Q2FY25 (versus. H2FY23’s 6GW), said analysts at ICICI Securities. 

It has emerged as the H1 bidder for O2 Power at a deal value of ₹12,468 crore. O2 Power, founded in 2020, is a renewable energy generation platform backed by EQT and Temasek. It has an operational portfolio of over 1.2GW and a total locked-in portfolio of 4.7GW. This brings JSWE Energy's locked-in portfolio to 20.4GW (including NTPC’s 400 solar project LoA announced recently) and locked-in EBITDA to ₹147.50 crore (JSW Energy- ₹11,000 Crore and  O2 Power   ₹3750 Crore), ICICI Securities added. The brokerage has a buy rating on JSW Energy.

Analysts at Motilal Oswal Financial Services (MOSL) said that there will be up to ₹I57 per share value unlocking upon the completion of the announced acquisition by JSW Energy. 

“With listed Renewable Energy (RE) generation companies currently trading at around 15 times enterprise value by Ebitda (earnings before Interest tax, depreciation and amortisation) the acquisition of 4.7GW high-quality renewable assets at around 7 times EV by EBITDA unlocks ₹57 in value,” MOSL added.

Rating agencies affirm ratings

Investor confidence also got a boost as rating agencies affirmed their credit ratings. India Ratings and Research Private and ICRA Limited vide their release dated December 27 reaffirmed the rating of ‘IND AA/Stable’ and ‘ICRA AA/Stable’, respectively for the non-convertible debentures (NCDs) facility and assigned/affirmed the rating of ‘IND AA/Stable’ and ‘ICRA AA/Stable’, respectively for the long term facilities and ‘IND A1+’ and ‘ICRA A1+’, respectively for the short term facilities, including Commercial Paper of the company.

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