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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.
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