Motilal Oswal has reiterated its Buy rating on JSW Energy with a target price of Rs 705 per share. This implies nearly 60% upside from current levels. According to the brokerage house, JSW Energy (JSWE) considering acquisition of KSK Mahanadi Power Company supports the company’s growth and share price.
3 reasons why Motilal Oswal has Buy on JSW Energy
JSW Energy targets acquiring KMPCL at Rs 16,000 crore and the Committee of Creditors has approved the company’s resolution. It has received the Letter of Intent (LoI) from the Resolution Professional (RP) for KMPCL and also the approval from NCLT or National Company LawTribunal. It is awaiting a nod from the Competition Commission of India (CCI). The acquisition is expected to receive final approval by Q1FY26.
Motilal Oswal on JSW Energy: Lenders eying total recovery
KMPCL is a 3.6 GW coal-fired power plant in Chhattisgarh. This includes 1.8 GW of operational capacity and an additional 1.8 GW in brownfield expansion potential. One of the key reasons Motilal Oswal sees it as a move supporting JSW Energy is the fact that the company has also committed to providing lenders with a 26% equity stake in the company. According to Motilal Oswal, this project was facing significant financial distress and with this move “lenders are expected to recover Rs 26,485 crore, representing about 90% of the total claims.” This also included JSW’s offer along with the Rs 10,500 crore in cash and undisputed fund receivables. “However, factoring in the 26% equity stake provided to lenders, the total recovery is expected to exceed 100%, as noted by a lender involved in the process,” added the brokerage house.
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KMPCL has a 3,600MW thermal power plant in Chhattisgarh. As per reports, three 600 MW units currently operational. This takes the total to 1,800 MW. Motilal Oswal listed out that the “company has PPAs with UPPCL (1,000 MW net), TANGEDCO (500 MW net), and CSPTCL (5% of net power export). The remaining 90 MW capacity is sold through short-term arrangements to IEX as well as other DISCOMs.” Not only does the company have long-term arrangement for procuring coal but also “has an under-construction expansion of 1,800 MW (comprising three 600 MW units), with one unit 40% complete and the balance of plants in place for the remaining 1,200 MW,” added Motilal Oswal.
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