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New Delhi, January 27: The JSW Energy Ltd shares is facing an extreme response during the today’s trading season, it dropped drastically following the news on the company announcing its December quarter (Q3 FY26) financial performance. The stock had dropped by up to 9.5% in the intraday in which it closed at an approximate of ₹432.20432.65 on the NSE as compared to the previous close of 477.65, with investors digesting weaker than expected operational performance despite a huge leap in net profit.
Market data indicated that there was a high selling pressure during all the session with JSW energy opening at an opening price of 475, a day low of 429.90 and not improving significantly as the day went by. The level of trading also went high to more than 16.65 million shares which is a very high volume compared to the average volume of trading and this indicates the level of nervousness by the investors after the announcement of earnings.
JSW Energy announced a high net profit of 237 percent in the year-on-year basis but the disillusionment in the revenue and operation fronts impacted the market. As reported by the brokerage, the Q3 revenues earned by the company were more than 13% below expectations and this has cast doubt on the existence of demand and execution problems in the quarter.
Weakness in operating performance was also raised by analysts. Performance was estimated to be estimated to be 6 7 per cent lower on an EBITDA basis than the street expectations signified pressure on core profitability despite higher reported earnings. Competitors in the market indicated that the growth in headline profits did not do enough to counter the sustainability and quality of earnings.
Reduced Power Production Burdens performance
One of the reasons that had an adverse impact in the quarter was reduced power production on a number of assets, which included plants in Ratnagiri and Barmer. Analysts that have been monitoring the company indicated that the level of reduced generation over the quarter had a direct effect on the operational performance and the revenue generation.
The meager generation output was particularly remarkable, considering that investors were anticipating a higher use of the generation at a time when power demand was projected to be high. The deficit contributed to the pessimistic mood of the stock in the post-results trade.
In addition to the quarterly figures, investors were also shaken by the indications of the declining growth rate. JSW Energy has supposedly won bids amounting to approximately 10.4 gigawatts within the first nine months of FY 26, a value that analysts termed as less than market expectations.
Bid activity in the period was poor as pointed out by the brokerage houses, which may have an impact on the future project pipeline by the company. The analysts also warned that the visibility of growth would be restricted in the near- and medium-term by slower bid wins, especially in a competitive power and renewable energy environment.
Brokerage Grow Wary, Targets Trimmed
After the Q3 performance, various brokerages reviewed their opinion on JSW Energy. Jefferies, a global brokerage company is reported to have reduced its target price and cut its earnings forecast citing adverse operating ratios and pessimistic near-term perspective.
Another aspect that was noted by analysts was the current expansion of the company due to acquisitions. These recent acquisitions have served to expand the capacity of JSW Energy in the long-term, but in the short-term, they will result in increasing the level of capitalization. This meant that future quarters may still display a comparatively poorer performance than it was in the previous year, analysts cautioned.
Appraisals Provide Semi-solace
Although the sell-off is sharp, valuation metrics are coming to its rescue. According to analyst estimates, JSW Energy is at present trading at approximately 34 times FY27 forward earnings. The stock further trades at a premium of between 2.5 times price-to-book which is typical of diversified power companies that have hydro and renewable resources.
Analysts observed that the diversified nature of JSW Energy (thermal power, renewables, hydro assets, and new segments such as green hydrogen) is able to offer certain long-term comfort. By the sum-of-the-parts (SOTP) valuation model, the valuations are not overvalued as indicated by the valuation of brokerage despite near-term earnings risks.
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