JSW Energy Ltd stock rose 5% on Friday to ₹482 following the announcement of raising fresh equity funds. JSW will raise nearly ₹13,000 crore equity funds through a mix of preferential allotment to promoters and qualified institutional placement (QIP). Promoters will bring in funds from equity shares and warrants to be priced at ₹525 apiece aggregating to nearly ₹3,000 crore. Assuming that QIP also takes place at the same price, the number of total equity shares will rise by about 14% to nearly 2 billion. This fund raise should calm the nerves of JSW’s investors at least for now, in the wake of a massive jump of 132% in net debt to ₹61,960 crore at Q2FY26-end from FY24 level. Prior to FY24, debt was manageable with net debt-to-Ebitda of less than 5x.
Though JSW’s Ebitda is likely to double from FY24 to FY26 at ₹11,000 crore as per Bloomberg consensus estimates, its valuation has seen a sharp de-rating from EV/Ebitda of 22x at FY24-end to 13x now. Valuation multiple has come off as foreign institutional investors (FIIs) have reduced their stake in JSW from 15% in 30 September 2024 to 12% on 30 September 2025, showed BSE data. After the recent sale by marquee GQG Partners, this reading should be 11%.
A debt spike could also be one of the factors for the FII selling, even if some of it can be attributed to their general exodus from Indian equities. Despite domestic institutional investors and retail stepping in to absorb FII selling, it has not supported the stock price. So, the fund-raising plan at a price higher than the current market price of JSW may have cheered the sentiment, albeit temporarily. JSW’s aggressive capital expenditure (capex) pipeline of ₹1.3 trillion over FY26-FY30, average of ₹26,000 crore per year, remains a worry. The capex is for raising power generation capacity from current level of 13GW to 30GW by FY30 along with 40GWH of energy storage capacity.
Long-term debt
Nearly half of the H1FY26 Ebitda of ₹5,785 crore has been spent on interest cost alone and it is likely to be the case going forward. If H1FY26 numbers are annualized, it leaves just about ₹6,000 crore of Ebitda or internal accrual for capex without factoring in tax, working capital requirements and debt repayment. Most of the incremental capex too will be funded by debt unless more equity dilution is done in future.
One may argue that debt financing should not be challenging as there is a high level of earnings visibility with almost 80% of the entire 30GW capacity being locked-in with power purchase agreement. The same is the case for energy storage systems wherein JSW has found buyers for 75% of the total proposed capacity at 40 GWH.
That said, Bloomberg consensus shows JSW’s net debt crossing ₹1 trillion by FY29, which will have to be repaid at some point of time. Thus, leaving very little cash flow for shareholders in the foreseeable future. This also limits the scope for expansion in valuation multiple.
Apart from increased financial risk, there is also project execution risk, which may have led to a 25% fall in JSW stock in 2025 so far. Recently, Elara Securities (India), raised the stock’s target price to ₹648. This includes the option value for future expansion (to be completed by FY31) at KSK Mahanadi, valued at ₹123. However, meaningful upside from the current level would be contingent upon earnings contributions from its recent acquisition and upcoming capacity additions.
