Mehabe score: 6 G Factor: 3 Piotski Score: 5 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 5.
Description
JSW Energy Ltd and its subsidiaries are primarily engaged in the business of generation of power from its power assets located at Karnataka, Maharashtra, Nandyal and Salboni. It is the holding company for the JSW group’s power business.
The company also has a JV company engaged in mining activities and an associate engaged in manufacturing of turbines.
Main Points
Power Projects
Presently, the company has 6 electricity projects across India with a total capacity of 4,559 MW of power :
Barmer – lignite – 1,080 MWSite:JSWENERGYMain Symbol:JSWENERGY
Stock trades at 189.0, above its 50dma 145.2. It also trades above its 200dma 101.81. The stock remains bullish on techicals
The 52 week high is at 185.00 and the 52week low is at 43.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– has been maintaining a healthy dividend payout of 26.61%
-Debtor days have improved from 66.89 to 50.85 days.
Weakness
– The company has delivered a poor sales growth of -6.76% over past five years.
– has a low return on equity of 7.14% for last 3 years.
-Promoters have pledged 25.35% of their holding.
Competition
– The industry trades at a mean P/E of 27.2x. Adani Green trades at the industry’s max P/E of 741.64x. JSWENERGY trades at a P/E of 39.0x
– Industry’s mean G-Factor is 3.1 while the mean Piotski score is 9.0. JSWENERGY has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is -7.5%. The max 1- month return was given by JSW Energy: a return of 23.02 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1570.0 cr compared to Rs 1793.0 cr for period ended Mar 2020, a fall of 12.4%
Operating Profits reported at Rs 633.0 cr for period ended Mar 2021 vis-vis 575.0 for period ended Mar 2020 .
Operating Margins expanded 824.9 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 0.65 compared to Rs 0.75 for previous quarter ended Dec 2020 and Rs 0.66 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 6922.0 cr for period ended Mar 2021 vis-vis sales of Rs 8273.0 cr for the period ended Mar 2020, a fall of 19.5%. The 3 year sales cagr stood at -4.9%.
Operating margins expanded to 42.0% for period ended Mar 2021 vis-vis 36.0% for period ended Mar 2020, expansion of 600.0 bps.
Net Profit reported at Rs 795.0 cr for period ended Mar 2021 vis-vis sales of Rs 1100.0 cr for the period ended Mar 2020, falling 38.4%.
Company recorded a healthy Net Profit CAGR of 116.8% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 3700.0 cr for period ended Mar 2021 vis-vis Rs 2082.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 6.0% compared to 7.0% over the last 3 Years. – The stock has given a return of 330% on a 1 Year basis vis-vis a return of 44% over the last 3 Years. – The compounded sales growth on a TTM bassis is -16% vis-vis a compounded sales growth of -5% over the last 3 Years. – The compounded profit growth on a TTM basis is -28% vis-vis a compounded profit growth of 169% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 5.55% vis-vis 6.0% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 12.57% vis-vis 12.21% for Dec 2020
Conclusion
– has reduced debt.
– has been maintaining a healthy dividend payout of 26.61%
-Debtor days have improved from 66.89 to 50.85 days. – The company has delivered a poor sales growth of -6.76% over past five years.
– has a low return on equity of 7.14% for last 3 years.
-Promoters have pledged 25.35% of their holding.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 145.2 and is trading at 189.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
