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Subdued demand on prolonged winter affects PLF
* JSW Energy’s Q4FY19 net generation fell 3.2% yoy/17.6% qoq to 4.2bn units due to prolonged winter that led to subdued demand. Average realizations were down 3.5% qoq/up 12.0% yoy to Rs4.6/unit. Accordingly, revenues rose 8.4% yoy to Rs19.2bn.
* EBITDA increased by 13.1% yoy to Rs4.8bn, driven by lower coal prices and other expenses, partially offset by rupee depreciation. Though interest expenses decreased 14.6% yoy, JSW narrowed its net loss to Rs58mn from a loss of Rs4.6bn in Q4FY18
* The company has debarred its plan to pursue the Electric Vehicle (EV) business and decided to focus on growth opportunities in the power space. JSW is working toward de-risking its business by tying up its open capacity under ST and LT tenders.
* We have lowered our earnings estimate for FY20/FY21 by 17.5%/26.3%, factoring in lower merchant realizations and rupee depreciation. We have rolled over DCF valuation base to FY20E and arrive at a SoTP-based TP of Rs74 (Rs73 earlier). Maintain Hold rating.
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