JSW Energy, a prominent power generation, transmission, and trading company, is projected for a significant stock rally, with brokerage firm PL Capital assigning a 'Buy' rating and a price target of Rs 646. This optimistic outlook comes after JSW Energy finalized the acquisition of Maruti Clean Coal & Power Limited (MCCPL)'s 300 MW operational thermal power plant located in Chhattisgarh.
Strategic Acquisition Strengthens Thermal Portfolio
The acquisition, completed at an enterprise value of approximately Rs 1410 crore (around Rs 47 million per MW), is a strategic move to bolster JSW Energy's thermal generation capabilities. The MCCPL plant is characterized by a high plant load factor, backed by long-term Power Purchase Agreements (PPAs), secured coal linkages, and stable cash flows. This integration is expected to be earnings accretive from its initial year of consolidation.
With this deal, JSW Energy's operational power generation capacity will increase by 300 MW, bringing its total operational portfolio to nearly 13.9 GW. The company's thermal installed capacity specifically will rise from 5.7 GW to 6.0 GW, solidifying its presence in the thermal power sector. Furthermore, the acquisition is anticipated to marginally increase JSW Energy's exposure to the merchant power market from about 4.0% to 4.7% of its generation portfolio, potentially allowing it to capitalize on favorable electricity market dynamics.
Financial Impact and Brokerage Estimates
Based on FY26 performance, MCCPL generated a revenue of Rs 790 crore and an EBITDA of nearly Rs 280 crore. This translates to an attractive EV/EBITDA multiple of approximately 5.1 times for the acquisition. PL Capital estimates that the acquisition will contribute roughly 4% to JSW Energy’s revenue and 3% to EBITDA, being earnings-accretive from the first year.
Incorporating MCCPL's contribution, PL Capital has revised its EBITDA estimates for JSW Energy for FY27 and FY28 upwards by roughly 2%. The brokerage's estimates also factor in a Rs 40 billion Qualified Institutional Placement (QIP) conducted at Rs 525 per share, which resulted in an equity dilution of approximately 4%.
About MCCPL
Maruti Clean Coal & Power Limited (MCCPL) owns and operates a 300 MW coal-fired thermal power plant in Korba, Chhattisgarh. Incorporated in 1999, the company has been commercially operating this asset since July 2015, making it a seasoned asset with established operations.