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Healthy Q3

SJVN (SJVN IN) reported a robust Q3 performance with 24% YoY revenue growth to INR 6.7bn, driven by a 25% increase in generation to 1,578MU. Hydro generation rose 15% YoY while solar saw a 387% jump, although wind declined 4% YoY. EBITDA grew 26% YoY to INR 4.6bn, but higher depreciation, up 23% YoY, from Nathpa Jhakri and interest expenses, up 81% YoY due to ongoing capex hurting profitability, limiting PAT growth to 7% YoY at INR 1.5bn. Project delays continue, with the Buxar Unit 1 currently expected in May 2025 (Unit 2 four months later) and Arun 3 pushed to Q4FY27 due to geological issues. Installed capacity stands at 2,466.5MW, with plans to add 3GW by FY26, including 1,320MW thermal &1,500MW renewables and 1.5GW in FY27. The company has a 7.2-GW renewable pipeline, targeting 25GW by FY30 and 50GW by FY40. We reiterate Buy with a lower TP of INR 131 on 2.5x FY27E P/B regulated equity.

Robust quarter on healthy generation: SJVN reported healthy revenue growth of 24% YoY to INR 6.7bn. Employee cost increased 21% YoY to INR 791mn. EBITDA rose 26% YoY to INR 4.6bn. Depreciation jumped 23% YoY to INR 1.4bn. Interest expense surged 81% YoY to INR 2.2bn. Interest and depreciation cost has increased due to ongoing capex and project financing. Nathpa Jhakri, which was commissioned in FY24, has resulted in the rise in depreciation cost. Other income was up 39% YoY to INR 897mn. Reported PAT went up 7% YoY to INR 1.5bn.

Generation increases 25% YoY in Q3: Power generation increased 25% to 1,578MU. Hydro generation rose 15% YoY to 1,388MU. Solar generation jumped 387% YoY to 172MU. Wind generation declined 4% YoY to ~17.6MU.

Project commissioning delayed: Management had earlier set a target for Buxar – Unit One to be commissioned in January 2025 but has now revised it to May 2025. It is likely Unit 2 of Buxar will be commissioned four months later. Arun 3 is set to be commissioned in Q4FY27. Geological surprises at the dam site has resulted in a delay in project execution. SJVN installed capacity currently stands at 2,466.5MW. It targets to add 3GW of capacity by FY26, which includes 1,320MW in thermal and 1,500MW of renewable capacity. It is likely to add 1.5GW in FY27, which includes the 900MW Arun 3 hydro project and renewable projects of 600MW. It comprises 7.2GW of renewable projects in pipeline. It targets 25GW of installed capacity by FY30 and 50GW by FY40.

Retain Buy with a lower TP ofINR 131: Management has an ambitious plan on installed capacity. It plans to achieve 25GW installed capacity in the near term. We remain optimistic about SJVN's long-term growth prospects, supported by strong sectoral fundamentals. The company continues to prioritize expanding its installed capacity across a balanced portfolio of hydro, RE and thermal power projects. We retain Buy with a lower of INR 131 from INR 137 on 2.5x (unchanged) FY27E P/B regulated equity. We lower our TP given the delay in project execution for its regulated and RE projects.

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