JSW Energy (JSWENERGY)

FairStock Score: 50/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Revenue momentum: sales grew 55.52% and latest quarter revenue is ₹4,082 Cr with net profit of ₹529 Cr.
• Piotroski F-Score of 8/9 indicates solid recent operational soundness across profitability, leverage and efficiency metrics.
• Promoter holding of 69.26% aligns management with minority shareholders and reduces governance risk.
• Long-term expansion: 5-year revenue CAGR of 11.15% shows capacity-building has been translating into topline growth.

Concerns

• Valuation is dangerous: P/E of 37.03, P/B of 3.60, PEG of 5.58 and EV/EBITDA of 390.21 leave no margin of safety versus Graham Number of ₹218.92.
• Balance sheet load: Debt/Equity of 2.37 and Altman Z-Score of 1.40 suggest high financial risk, while free cash flow is deeply negative at ₹-19,152 Cr.
• Capital efficiency is weak: ROE 8.32% and ROCE 6.49% are too low for a business requiring this much debt and reinvestment.
• Shareholder return is thin: dividend yield of 0.41% offers little compensation while waiting for growth.

AI Analysis

Let me start with a simple truth: JSW Energy is growing, but growth alone is not value. The company reported sales growth of 55.52% and a five-year revenue CAGR of 11.15%; the latest quarter has ₹4,082 Cr of sales and ₹529 Cr of net profit. That is encouraging. The Piotroski score of 8/9 and promoter holding of 69.26% are also positives. However, when I apply Graham's lens, the picture weakens. A power generation business selling at ₹561.10, with a P/E of 37.03 and a P/B of 3.60, is not a bargain. Graham's Number, derived from book value and earnings, is ₹218.92. Buying at ₹561.10 means I am paying far above any conservative valuation, with a margin of safety around -122.8%. The market is pricing in a great deal of future success. But look at the financial engine: debt/equity is 2.37, Altman Z-score is 1.40, and free cash flow is minus ₹19,152 Cr. This is not a company generating cash for owners; it is a capital-hungry operation. ROE of 8.32% and ROCE of 6.49% tell me that each rupee reinvested is not earning a superior return. In power generation, where electricity is a commodity, I do not see a durable moat that justifies a 37x earnings multiple. The EV/EBITDA of 390.21 is literally nosebleed territory. The dividend yield of 0.41% means I am not being paid to wait. This is a fast grower by reported numbers, but it fails my test of business quality and price discipline. I prefer a wonderful business at a fair price; JSW Energy, at this price, is a risky growth story, not a value investment. If I owned it, I would watch cash flow and deleveraging closely.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer