JSW Energy gets short-term jolt

JSW Energy Ltd's stock fell by 6% on Wednesday after its December-quarter results came as a big disappointment even as power generation by the company shot up 10% year-on-year to 6.8 billion units.

- Manish Joshi

JSW Energy's consolidated Ebitda fell as much as 18% year-on-year to ₹914 crore, with its margin slipping to 37.5% from 43.7% a year ago. The primary villain in this story was short-term power realizations, which fell sharply. These rates are volatile and impact profitability, even though most of JSW Energy's capacity is locked in with long-term power purchase agreements.

Average merchant power rates in the third quarter on the exchanges declined 26% year-on-year to ₹3.71 per unit owing to better availability of hydro power and firm power. JSW Energy has not disclosed its own merchant power realization per unit. Adding to its profitability woes was an 18% rise in employee costs and 26% in other expenses.