Why Does Morgan Stanley Remain Overweight on JSW Energy After the Salboni PPA?
About JSW Energy
JSW Energy is a diversified power producer with a growing portfolio across thermal, hydro, solar, wind, and storage assets. The company has been steadily expanding its locked-in capacity base, providing long-term earnings visibility while balancing thermal stability with renewable growth.
Morgan Stanley has reiterated its Overweight rating on JSW Energy with a target price of ₹693, following the signing of a fresh power purchase agreement (PPA) for a greenfield thermal project in West Bengal.
Salboni PPA – Key Details
🔹 Greenfield 1,600 MW thermal power plant at Salboni, West Bengal
🔹 Second PPA tariff discovered at ₹5.8/unit
🔹 Higher than the earlier tariff of ₹5.45/unit
The brokerage highlighted that the higher tariff reflects a realistic pass-through of increased thermal equipment costs over the last 12 months, improving return visibility for new thermal investments.
Investors tracking power utilities alongside market trends often align positioning using Nifty Trading View.
Fuel Security and Policy Support
| Aspect | Details |
|---|---|
| Coal sourcing | Domestic linkage coal |
| Allocation policy | SHAKTI B (iv) – West Bengal allocation |
| Fuel risk | Lower volatility due to linkage security |
Domestic coal linkage under the SHAKTI policy significantly reduces fuel supply and cost risks, enhancing the stability of cash flows from the Salboni project.
|
Strategic Positives
🔹 Higher tariff improves project IRRs 🔹 Fuel security via domestic coal linkage 🔹 Long-term PPA-based earnings visibility |
Key Monitorables
🔻 Execution timelines for greenfield project 🔻 Thermal capex inflation risk 🔻 Regulatory and policy continuity |
Following this PPA, JSW Energy’s thermal capacity expands to 10.7 GW, while its total locked-in generation capacity rises to 32.1 GW, strengthening medium- to long-term revenue certainty.
Valuation and Brokerage View
Morgan Stanley believes JSW Energy’s expanding locked-in capacity, improving tariff profile, and balanced thermal-renewable mix justify its Overweight stance. The Salboni PPA enhances earnings visibility at attractive returns despite rising equipment costs.
Broader power sector sentiment can also be tracked using BankNifty Trading View.
Investor Takeaway
Derivative Pro & Nifty Expert Gulshan Khera, CFP®, believes the Salboni PPA meaningfully strengthens JSW Energy’s long-term earnings visibility by locking in higher tariffs with fuel security. While thermal costs have risen, disciplined tariff discovery and policy-backed coal linkage support sustainable returns, reinforcing the company’s strategic positioning. More structured market insights are available at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on JSW Energy
Why did JSW Energy sign a new thermal PPA?
What is the tariff for JSW Energy’s Salboni project?
How does SHAKTI coal linkage benefit JSW Energy?
What is JSW Energy’s total locked-in capacity?
Is JSW Energy still attractive at current valuations?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
