JSW Energy Ltd Q2 FY24 Earnings Conference Call Insights

Key highlights from JSW Energy Ltd (JSWENERGY) Q2 FY24 Earnings Concall

• High Power Demand and Deficit
  • The power demand has increased significantly, with 30% growth in Q2 and 19% growth year-to-date in October.
  • The increase in demand led to high power deficits, similar to 2004-2006 levels despite much higher grid capacity now.
• JSW Energy Financial Performance
  • JSWENERGY’s power generation increased 29% to 8.6 BU, leading to highest ever EBITDA of INR2,008 crores and PAT of INR850 crores.
  • Key factors were higher renewable generation, higher merchant sales at higher tariffs, and improved performance of Mytrah acquisition.
• Progress on Capacity Expansion
  • JSW commissioned 86 MW renewable capacity in Q2, taking total to 216 MW for the year.
  • On track to commission 2.4 GW pipeline as per schedule, including Ind-Barath and Mytrah projects.
• New Growth Phase with JSW Steel
  • Signed MoU with JSW Steel for 6.2 GW renewable capacity, 2.7 GWh storage and 85-90 KT green hydrogen by 2030.
  • Will require additional 1.8 GW renewable and 1 GWh storage.
  • Historically done all projects at minimum mid-teen IRRs.
• Strong Receivables Management
  • Receivables increased only 10% YoY despite major capacity expansion.
  • Performance expected to further improve in 3-6 months.
• Merchant Power Sales Driving Profitability
  • Company sold 660 million units in short-term markets.
  • Taking advantage of power shortage and high prices.
  • Helping boost revenues and margins.
• Imported Coal Prices Declining
  • API4 index down 65% year-over-year to $113 per ton in Q3.
  • Leading to lower fuel costs for Ratnagiri and Vijayanagar plants, enabling better profit margins.
• Tight Power Market Conditions
  • Discoms trying to block power due to supply shortages.
  • Leading to more short-term PPAs rather than long-term.
  • Market expected to remain tight for months or quarters ahead.
• Mytrah Acquisition Update
  • Ramp-up ahead of schedule.
  • Generation up 25-27% year-over-year due to higher availability.
  • Lower interest costs from debt refinancing and rephasing.
  • Receivables down 50% from last year.
  • On track to meet or exceed EBITDA guidance sooner than expected.
• Green Hydrogen Plans Underway
  • Recently increased target from 10 GW to 20 GW.
  • Ordered electrolyzer equipment from Chinese supplier.
  • Construction started on first green hydrogen plant and is expected to be operational by March 2025.
  • MOU with JSW Steel provides advantage in participating in green hydrogen tenders under National Mission.
• Growth Outlook
  • Visibility on 80% of 20 gigawatt by 2030 target with JSW Steel and other deals.
  • Upside potential seen to exceed this based on financial position and partnerships.
  • Guidance may be revised upwards in 1-1.5 years.
• Pumped Storage Projects (PSP) Status and Timeline
  • Six projects totaling 6.5 gigawatts under development with average 6.5 hours storage time.
  • Currently working on regulatory approvals and equipment ordering.
  • Expect to start construction in early FY24 once bids won and financial closure achieved.