Company Update : JSW Energy Ltd By Motilal Oswal Financial Services Ltd
Completes acquisition of 125MW RE capacity from Hetero Group
*Completes acquisition of 125MW wind capacity: On 10th Jan’25, JSWE announced the successful completion of its acquisition of three Special Purpose Vehicles (SPVs) through its wholly owned subsidiary, JSW Neo Energy Limited (JSWNEL). These SPVs are acquired from Hetero Labs Limited and Hetero Drugs Limited. Previously, on 19th Oct’24, JSWE had disclosed that definitive agreements were executed by JSWNEL to acquire these three SPVs but the transaction was contingent upon the fulfillment of customary regulatory approvals.
*Purchase consideration: The transaction was finalized at an enterprise valuation of INR6,300m (excluding net current assets and other adjustments as outlined in the Share Purchase Agreements).
*Asset level details: The acquired portfolio comprises 125MW of wind energy projects located in Andhra Pradesh and Maharashtra. These projects are backed by long-term Power Purchase Agreements (PPAs) with a blended tariff of ?5.22 per kWh and have an average remaining operational life of ~15 years.
*Acquired at ~5.7x EV/EBITDA; adds ~1.6% to FY25E EBITDA on a full-year basis: Assuming a 22% plant load factor (PLF) and a tariff of INR 5.22/unit, we estimate these assets to generate an EBITDA of ~INR 1.1b per annum (~1.6% of FY25 EBITDA), implying an EV/EBITDA of ~5.7x for this deal vs. ~15x FY27 EV/EBITDA for NTPC Green. The assets will contribute to earnings from 4QFY25 onwards.
vTotal locked-in capacity now at ~25GW; Maintain Buy: With this addition, JSWE’s total locked-in capacity now stands at 24.7GW, which includes 7.8GW of operational assets, encompassing a diverse energy mix and a robust off-taker base. We reiterate our BUY rating on JSWE with an SOTP-based TP of INR805.
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