Here's why Motilal Oswal downgraded and cut its price target on JSW Energy by nearly 17%

JSW Energy Ltd. shares declined on Wednesday after brokerage firm Motilal Oswal downgraded its rating on the stock and reduced its price target by 16.5%, post its first quarter earnings.

The brokerage now has a "neutral" rating on the stock from the previous "buy" recommendation and has reduced its target to ₹550 per share from the previous ₹659 apiece. This indicates a 2% downside from its previous close.

The brokerage said JSW Energy's second quarter outlook is robust and its commissioning is on track. But its reasons for downgrading its rating on the stock are:

• The stock price has rallied 17% in the lsat four months valuation comfort has reduced as it is trading at 12 times its estimated EV/EBITDA for FY28.


• Motilal Oswal has cut JSW Energy's FY28 EBITDA estimates by 9%, primarily reflecting a slower renewable commissioning pace in FY28 than previously assumed.

The brokerage said it continues to view JSW Energy positively due to its robust earnings growth trajectory, strong capacity expansion plan (from the present 14.5 GW to 30 GW by 2030) and superior, execution capabilities compared to peers.

However, its revised target price implies a 2% downside, prompting the brokerage the stock downgrade its rating as well.

Motilal Oswal said while the company's long-term growth outlook remains compelling, it believes the current valuation adequately reflects these strengths.

Jefferies

The brokerage has a "buy" rating on JSW Energy with a target price of ₹720 per share, an upside of 28.2% from its previous close.

It said the company's EBITDA was 7% above estimates, given higher capacity addition. Its EBITDA growth was muted at 3% compared to last year's rise, as KSK Energy (13% of the capacity) witnessed unplanned shutdown of 17 days due to extreme wind conditions which has stabilized.

The company added 1.1 GW capacity till date, which compares will with the FY27 expectation of 2.2 GW, Jefferies added.

CLSA

The brokerage has a "hold" rating on the stock with a target price of ₹549 per share, a downside of 2.2% from its previous close.

It said the company reported another weak quarter its PAT declining 37% from last year after a profit before tax loss in the prior quarter. This is despite a thermal power acquisition, mainly due to higher funding costs from leveraged M&As, a decline in power purchase agreement (PPA) tariffs and weak generation hurting its merchant power business.

Its core parent first quarter results were weak, with EBITDA/kWh up just 4%, despite a robust merchant market, led by dark spread compression and M&A funding costs.

JSW Energy is giving up on the merchant power market, CLSA said.

While its transition has slowed due to its move towards coal asset additions, this thin free float stock is trading at 24 times its FY28 price-to-earnings estimates, the brokerage added. It has cut the FY27-29 earnings per share (EPS) estimates by 11%-13% on weak generation and tariff cuts.

JSW Energy says capacity addition on track

JSW Energy's joint MD and CEO Sharad Mahendra told CNBC-TV18 on Thursday that the company is on track for its 3 GW capacity addition. He is confident of adding the entire FY26 capacity in the first half of FY27.

Mahendra said that post its recent fund raise, its debt has dropped to ₹61,000 crore. The company has been deleveraging the balance sheet and the cash generate from operations is strong.

The CEO said the company's finance cost is at 8.36%, which they are now looking to reduce further. At present, the 4.9x net debt to EBITDA is comfortable, he added.

Mahendra said the KSK Mahanadi saw significant downward revision of tariff after acquisition. The EBITDA run rate at KSK Mahanadi will be closer to ₹3,000 crore, he added.

Stock performance

Of the 22 analysts who have coverage on JSW Energy, 14 have a "buy" rating, three have a "hold" rating and five have a "sell" rating.

Shares of JSW Energy are trading 0.5% lower at ₹559. The stock has risen 11% so far in 2026.

Also Read: Zydus Life gets USFDA nod to begin Phase III trial of sickle cell anaemia treatement drug with ICMR