JSW Energy Stock Soars 8% On Plans To Acquire Q2 Power Green Energy Biz For Rs 12,468 Crore; Largest Ever

The shares of JSW Energy witnessed a sharp rally of almost 8% in early trading on Monday, December 30, following the company's announcement of a major acquisition. JSW Energy, through its wholly-owned subsidiary JSW Neo Energy Limited (JSWNEL), has entered into definitive agreements to acquire a 100% stake in O2 Power Midco Holdings Pte Limited, O2 Energy SG Pte Limited, and their subsidiaries.

The acquisition, valued at Rs 12,468 crore, will boost JSW Energy's renewable energy portfolio, bringing a consolidated operational and under-construction capacity of 4.7 GW under its fold.

Stock Performance

The stock opened at Rs 650.20 on the Bombay Stock Exchange (BSE), over 5% higher than its previous close of Rs 625.05. It climbed further to hit an intraday high of Rs 673.05, reflecting gains of 7.7%. By 1:35 pm, shares were trading with gains of nearly 3%, priced at Rs 643.75 on the National Stock Exchange (NSE).

The investor sentiment comes on the back of JSW Energy's focus on expanding its renewable energy footprint. Over the past year, the stock has delivered a 60% return.

Details of the Acquisition

In its regulatory filing, JSW Energy outlined the specifics of the deal, which is subject to approvals from the Competition Commission of India (CCI) and other customary clearances. The acquisition involves the takeover of O2 Power, a renewable energy platform co-founded by EQT Infrastructure and Temasek, global investment powerhouses.

The asset portfolio of O2 Power spans diverse energy sources, including solar, wind, and niche renewable segments, with operations and projects in various stages of development.

JSW Energy expects to complete the acquisition by May 26, 2025. The company views this move as a critical milestone in achieving its 20 GW renewable-led capacity target ahead of FY 2030.

Financial Implications

This acquisition represents a strategic step for JSW Energy, enabling it to capitalize on India's transition to clean energy. With Rs 538 crore in revenue from operations reported in FY24 by O2 Power, the deal promises to enhance JSW Energy's earnings and operational efficiency.

Brokerage Views

Domestic brokerage firm Motilal Oswal has reiterated its 'buy' rating on JSW Energy, setting a target price of Rs 810 per share. The firm estimates that the stock could unlock an additional value of Rs 57 per share upon the completion of the deal.

Motilal Oswal also highlighted the favourable valuation of the acquisition, noting that the 4.7 GW renewable assets are being acquired at 7x EV/EBITDA, compared to listed renewable energy companies trading at 15x EV/EBITDA.

While the brokerage expects JSW Energy's net debt-to-EBITDA ratio to rise from 4.7x to 5.4x by FY26, it reassured investors that the temporary increase in leverage is not a cause for concern.

This acquisition aligns with India's ambitious renewable energy goals and positions JSW Energy as a key player in the country's clean energy transition. The company's focus on expanding its solar and wind energy capabilities reinforces its commitment to sustainability and long-term growth.

The asset portfolio from O2 Power will provide JSW Energy with an advantage, offering exposure to multiple renewable energy verticals and geographies within India.