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.