JSW Energy Limited Q1 FY27 Earnings Call Summary

Event Participants

Executives

3 Bikash Chowdhury, Chandrasekaran Prabhakaran, Sharad Mahendra

Analysts

8 Apoorva Bahadur, Atul Tiwari, Dhruv Muchhal, Dishant Jain, Nikhil Nigania, Rajesh Majumdar, Satyadeep Jain, Sumit Kishore

Financials & KPIs

Geographic & Segment Commentary

• Thermal: Generation declined 6% YoY to 8 BUs. Mahanadi was hit by a one-off 17-day evacuation outage (~184 MUs, categorized under Force Majeure), now fully normalized with 100% availability in July. Utkal generated similar volumes but sold under long-term PPAs (Karnataka/Assam) versus merchant last year, with planned shutdowns taken for annual availability. Open capacity is under 4%; July round-the-clock PLF was 85%+ with 90%+ availability. API4 coal prices rose ~25% YoY ($90→$113), mitigated by domestic coal shift; DAM prices firmed to ₹5.10/unit (+16% YoY vs ₹4.40).

• Hydro: Portfolio generation declined ~26% YoY on weak hydrology (national hydro -7%, Sutlej basin -39%, Ravi basin -24%) due to a longer winter and delayed snowmelt; Q1 FY26 had an early monsoon onset. Tidong (150 MW) was commissioned ahead of schedule (Oct 2026 → Q1), adding ₹20-22 crore EBITDA and capturing the hydrology season. July generation is excellent — Karcham, Baspa, and Kutehr operating at >100% PLF — and capacity charges continue for availability; management expects plants to achieve full-year design energy.

• Solar & Wind: Solar generation rose 29% YoY and wind 3% YoY, supported by +1,168 MW additional capacity. Solar PLF of ~21% reflects Q1 seasonality (historical trend: 22% Q1, 26% Q3, 28% Q4) and TGNA curtailment impact; wind PLF in July is already 5-6% higher MoM on improved wind speeds.

• Pumped Storage & BESS: Bhavali (1,500 MW, Maharashtra, MSEDCL PPA) is fully ready — EC and forest Stage-1 clearances received, L&T civil order and Voith electromechanical order placed — with high-teen IRRs at ₹5 crore/MW capex. Kandhaura (1,680 MW, UP, 1,500 MW PPA) readiness expected by Q4 FY27; Narihalla (Karnataka) PPA expected soon. The 5 GWh BESS plant (commissioned Q4 FY26) secured its first external order of ~₹440 crore at $2.75-3/KWh margins (₹150 crore annual EBITDA at full capacity).

• Manufacturing & Integration: Wind blade facility at Halol (450 blades/year, ~600 MW supported) commissioned June 8; second facility at Chitradurga expected by FY27. TJPS (Toshiba JSW Power Systems) stake raised to 10.7% from 2.4%; GE Durgapur boiler business acquisition expected to close this quarter.

Company-Specific & Strategic Commentary

• Capacity Execution at Scale: 873 MW added in Q1 FY27 — one of the sector's largest single-quarter additions — with ~1.1 GW cumulative since April 2026 (36% of FY27 guidance and 87% of FY26's full-year additions). Remaining 1.9 GW for FY27 is 100% connectivity-secured; 530 MW of group captive (majority off-grid with dedicated transmission lines) is fully insulated from grid curtailment risk.

• Balance Sheet Deleveraging: Executed a ₹10,150 crore capital raise — the largest growth capital raise in the Indian power sector — via promoter preferential (₹3,000 crore, ₹1,125 crore received), JSW Steel stake sale (2.5 crore shares, ₹3,150 crore), and QIP (₹4,000 crore). Net leverage improved to 4.95x TTM from ~5.2x FY26; committed below 5x by 2030.

• Vertical Integration De-risking Thermal Build-out: TJPS stake increased to 10.7%; GE Durgapur boiler acquisition (1.1 GW nameplate, expandable to 1.6 GW with de-bottlenecking) closing this quarter; benchmarked with TJPS Chennai's 2x800 MW capacity. Halol blade facility supports ~600 MW wind/year; combined with Chitradurga, lowers LCOE and secures supply chain for all 800 MW expansion plants.

• Thermal Growth & Inorganic Pipeline: Definitive agreement to acquire Maruti Clean Coal & Power (300 MW, Chhattisgarh) with 195 MW net long-term PPA to Rajasthan (14 years residual), 5% power at variable cost to Chhattisgarh discom, ~64 MW merchant; coal secured via SECL FSA and SHAKTI linkage. Mahanadi Unit 4 (600 MW) on track for FY28 at 25-30% lower cost than greenfield; Units 5-6 strategy (1.8→3.6 GW) to be announced soon; Salboni Phase 1 (2x800 MW) clearances, land, and equipment orders complete with site work in full swing.

• Green & Energy Storage Ambition: Renewables portfolio avoided 16-17 MT CO₂ in FY26 and ~4.5 MT in Q1 FY27 (Indian grid emission factor basis). First large external BESS order (₹440 crore) received; exploring cell manufacturing backward integration under PLI incentives and container scaling (5→6/8 MWh) for cost efficiency; merchant BESS opportunity under evaluation.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Thermal Operations & Backdowns

• Question: Industry thermal plants are operating below technical minimum during peak solar hours (12-1 pm) — what has been JSW's fleet experience? (Sumit Kishore, Axis Capital)
• Answer: Mahanadi backdowns were minimal due to attractive tariffs and merit-order despatch; Utkal's minimum load stayed above 60% in most cases. July has been strong — 85%+ PLF and 90%+ availability round-the-clock. Capability to operate even below 50% already exists at Ratnagiri and Vijayanagar plants (Sharad Mahendra). Fixed costs continue to be recovered during backdowns, with flexibility to sell into merchant market (C. Prabhakaran).

BTG Sourcing & Vertical Integration

• Question: How is equipment sourcing progressing for Mahanadi 600 MW and Salboni, and what is internal boiler/turbine/generator nameplate capacity? (Sumit Kishore, Axis Capital)
• Answer: Mahanadi Unit 4 was 30-40% complete at acquisition with balance-of-plant already in place; orders placed with the same Chinese suppliers, commissioning on track for FY28. Units 5-6 strategy will be announced soon. Salboni's TG order is placed with TJPS; GE Durgapur boiler acquisition (1.1 GW nameplate, expandable to 1.6 GW after de-bottlenecking) closes this quarter, benchmarked against TJPS Chennai's 2x800 MW capacity — supply chain fully de-risked for all 800 MW expansions (Sharad Mahendra).

BESS Margins & Backward Integration

• Question: What does the ₹440 crore external BESS order imply for margins, and is there a glide path for higher value addition? (Sumit Kishore, Axis Capital; Apoorva Bahadur, IIFL Capital)
• Answer: Margin is $2.75-3/KWh, translating to $15 million (₹150 crore) EBITDA per year at full capacity; PLI incentives for cell manufacturing are being evaluated (C. Prabhakaran). Backward integration into cell manufacturing is under discussion with technology partners; container capacity scaling from 5 to 6-8 MWh will improve cost efficiency. No long-term cell supplier agreement exists currently (Sharad Mahendra).

Mahanadi Unit 4: PPA vs Merchant

• Question: Will Chinese equipment sourcing for Unit 4 restrict tying up with state utilities? (Apoorva Bahadur, IIFL Capital)
• Answer: There is no such regulatory restriction; multiple states are interested, with several preferring 600 MW/lower capacity for backdown flexibility. Demand is rising for replacing imported coal-based purchases with domestic coal, given coal price and currency trends. Even as merchant, the project remains attractive due to mine-adjacent coal and significantly lower completion cost; PPA signings are a matter of confidence (Sharad Mahendra).

RE Connectivity & TGNA Curtailment

• Question: Is the balance 1.9 GW FY27 connectivity operational, and what is the FY28 position? (Apoorva Bahadur, IIFL Capital)
• Answer: 300 MW is under TGNA, converting to GNA by Aug 31; the 400 MW O2 Power Rajasthan project has connectivity delayed to Sep-Oct. Of the balance 1.9 GW, ~530 MW is group captive — majority off-grid with dedicated transmission lines, fully insulated — while utility projects have fully operational STU/CTU connectivity. The entire 1.9 GW is 100% secured. FY28 guidance will be communicated at the right time (Sharad Mahendra). Q1 curtailment was 69 MUs wind+solar combined; curtailment under GNA is treated as deemed plant availability with full tariff recovery; revenue impact ~₹15 crore, not material (C. Prabhakaran).

Pumped Storage Readiness & Economics

• Question: What is the capex and confidence level for Bhavali/Kandhaura, and why did the company skip the SECI pumped storage tender? (Satyadeep Jain, Ambit Capital; Nikhil Nigania, Bernstein)
• Answer: Bhavali is fully ready — EC and forest Stage-1 clearances in hand, land largely acquired, L&T civil order and Voith electromechanical order placed; Kandhaura is expected to reach readiness by Q4 FY27. Capex is "not very far" from ₹5 crore/MW; returns are significantly high-teen IRRs versus mid-teen benchmarks. Narihalla (Karnataka) clearances are at an advanced stage with PPA expected soon. SECI tender was skipped because forest Stage-1 clearance was a pre-condition; a new ~9 GWh site is now ready for future opportunities (Sharad Mahendra).

Thermal PLF Decomposition

• Question: Why were thermal PLFs lower across plants (Ratnagiri, Vijayanagar, Utkal) despite strong demand? (Dhruv Muchhal, HDFC Asset Management)
• Answer: These were deliberate planned shutdowns, not solar backdowns: Utkal took a shutdown to ensure annual availability/reliability under its new PPAs — June/July availability is now above 91%; Ratnagiri shut down to secure the 80% availability threshold for its 2-part tariff/group captive structure; Mahanadi's 17-day evacuation issue is now normalized with 100% availability in July (Sharad Mahendra).

Maruti Acquisition & Debt/Funding

• Question: What is the logic of acquiring a subcritical 300 MW plant, and what are the gross debt and FY27 funding details? (Rajesh Majumdar, 360 ONE Capital)
• Answer: The asset is close to the coal mine; 64 MW open capacity provides PPA/merchant upside for evening peak, and technical due diligence supports a brownfield doubling option at the same site; acquisition is value-accretive on EV/EBITDA multiples. Gross debt is ~₹74,000 crore with cash ~₹12,900 crore (net ~₹55,000 crore); QIP and JSW Steel sale proceeds are fully in; ₹1,875 crore promoter preferential remains to be received by June 2027. Capex funding: ₹7,000 crore raised plus ~₹12,000-12,500 crore operating cash flow; balance via incremental debt (₹7,500 crore) (Sharad Mahendra; C. Prabhakaran).

PAT Trajectory & Fixed Charge Recognition

• Question: Will suppressed PAT persist given rising depreciation and finance costs, and when are fixed charges recognized/received at lower PLF? (Atul Tiwari, JPMorgan; Dishant Jain, Quasar Capital)
• Answer: Interest expense is structurally higher in initial years post-commissioning due to moratorium during construction; EBITDA-to-PBT/PAT translation improves over 4-5 years as assets stabilize — this is standard industry economics (Sharad Mahendra). On fixed charges: Mahanadi's plant availability entitlement is ~85% annual; income is recognized in the current quarter once availability is achieved, with actual cash collection expected over the next 2-3 quarters (Sharad Mahendra).

Key Takeaway

JSW Energy delivered a landmark Q1 FY27, commissioning 873 MW — among the sector's largest single-quarter additions — taking cumulative additions since April to ~1.1 GW (36% of FY27's 3 GW target and 87% of FY26's full-year total). Revenue was flat at ₹5,437 crore, EBITDA rose 2% to ₹3,103 crore, but PAT attributable fell to ₹471 crore as depreciation (+20%, ₹890 crore) and interest (+16%, ₹1,519 crore) reflected newly capitalized assets. The ₹10,150 crore capital raise (promoter preferential, JSW Steel stake sale, QIP) lifted cash to ₹12,880 crore and cut net leverage to 4.95x TTM from 5.2x at FY26. Strategy centers on vertical integration (TJPS stake raised to 10.7%, GE boiler acquisition closing this quarter, Halol blade facility operational), a ₹440 crore BESS external order, and the Maruti Clean Coal 300 MW acquisition; Mahanadi Unit 4 (FY28) targets 25-30% lower capex with Units 5-6 announcements imminent. Momentum is carrying into Q2 with 225 MW added in July, but hydrology recovery, TGNA curtailment (69 MUs, ₹15 crore), thermal backdown pressure, and a 4-5 year PAT stabilization curve remain key watch points.