Shares of JSW Energy surged as much as 8 per cent at the opening tick on Monday after the company announced its foray into the renewable energy space. The JSW Group company has been able to garner positive reports from the brokerage firms post the announcement of this acquisition.
JSW Neo Energy, a wholly-owned subsidiary of JSW Energy, has signed a definitive agreement to acquire O2 Power, a renewable energy platform jointly established by Swedish asset manager EQT Partners and Singapore’s Temasek Holdings, said the company in an exchange filing.
O2 entities have a consolidated operational and under construction/development renewable energy portfolio of 4.7 GW. The transaction values the platform at an enterprise valuation of Rs 12,468 crore ($1.47 billion), after adjusting for net current assets, it added.
Following the announcement, shares of JSW Energy jumped more than 7.67 per cent to Rs 673.05 on Monday, commanding a total market capitalization of more than Rs 1.17 lakh crore. The stock had settled at Rs 625.05 in the previous trading session on Friday.
The transaction entails acquisition of O2 Power Midco Holdings and O2 Energy SG and is subject to approval of the Competition Commission of India (CCI) and other customary approvals standard to a transaction of this size, said JSW Energy. O2 entities reported a cumulative revenue from operations at Rs 538 crore for FY24.
Shares of JSW Energy have surged about 67 per cent from its 52-week low at Rs 404 hit in January 2024. However, the stock has corrected nearly 17 per cent from its 52-week high at Rs 804.95 hit in September 2024. The stock has remained majorly flat in the last one month, while it is down 13 per cent in six months.
Motilal Oswal Financial Services likes the overall quality of assets. It values JSW Energy's core business at 15 times FY27 EBITDA, reflecting its strong operational performance and market position. The stake in JSW Steel is valued at a 25 per cent discount to the current market price, it said.
The total equity value of JSW Energy was determined by aggregating the values from these different components, leading to a target price of Rs 810 per share, added Motilal. "Additionally, note that we see an option value of Rs 60 per share from KSK Mahanadi, which should materialize once the deal is approved."