JSW Energy Surges 8% After ₹12,468 Cr Acquisition of O2 Power

Shares of JSW Energy surged nearly 8% to ₹673.05 during early trading on Monday, December 30, commanding a total market capitalization of more than ₹1.17 lakh crore, after its wholly-owned subsidiary, JSW Neo Energy, finalized an agreement to acquire O2 Power on 27th December.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

This acquisition, valued at ₹12,468 crore ($1.47 billion) after adjustments for net current assets, has been well-received by analysts, who view it as a strategic move to expand JSW Energy’s renewable energy portfolio and accelerate its growth trajectory.

JSW Neo Energy Limited has inked a definitive agreement to acquire O2 Power, a renewable energy platform co-founded by Swedish asset manager EQT Partners and Singapore-based Temasek Holdings.

O2 Power boasts a substantial renewable energy capacity of 4,696 MW. Of this, 2,259 MW is projected to become operational by June 2025, with 1,463 MW currently under construction and an additional 974 MW in the development pipeline slated for completion by June 2027.

The assets are distributed across seven resource-rich states in India, offering an average tariff of ₹3.37 per kilowatt-hour (kWh). With an average remaining lifespan of 23 years, these facilities add significant long-term value to JSW Energy’s renewable energy portfolio.

Following this acquisition, JSW Energy’s secured generation capacity rises by 23%, reaching 24,708 MW and bringing the company closer to its goal of achieving 25 GW capacity by FY27/28.

JSW Energy detailed the transaction in a stock exchange filing on December 27, highlighting the capacity breakdown of O2 Power’s renewable assets: 2,259 MW operational by mid-2025, 1,463 MW under construction, and 974 MW planned for mid-2027. The assets’ spread across multiple states and a 23-year average lifespan underscore their strategic value.

Commenting on the deal, Sharad Mahendra, Joint Managing Director and CEO of JSW Energy, expressed enthusiasm, stating, “The acquisition of O2 Power’s 4.7 GW renewable energy platform marks JSW Energy’s largest acquisition to date. It strengthens our position as a key player in India’s energy sector, enhances our operational presence across vital resource-rich states, and brings significant value to our stakeholders. We warmly welcome the talented O2 Power team into the JSW Energy family.”

The transaction involves acquiring O2 Power Midco Holdings Pte. Ltd. and O2 Energy SG Pte. Ltd. and is subject to approval from the Competition Commission of India (CCI) and other customary clearances.

Piyush Singhvi, Managing Director and Head of India & Southeast Asia for EQT Infrastructure, remarked, “India represents one of the most promising renewable energy markets globally, and O2 Power has been pivotal in driving its clean energy transition. We take pride in being part of this transformative effort.”

Pritesh Vinay, Director (Finance) and CFO of JSW Energy, emphasized the financial benefits, stating, “The acquisition of O2 Power represents a compelling opportunity from both ‘build versus buy’ and quality perspectives. It aligns with our focus on capital efficiency and high cash return projects. This milestone supports our growth ambitions, reinforcing our commitment to value creation for shareholders.”

JSW Energy aims to achieve a renewable energy-led capacity target of 20 GW by FY2030, further solidifying its position in the sector.

Brokerage firm Motilal Oswal highlighted the acquisition as a value-enhancing move, noting that it increases JSW Energy’s renewable capacity by 23%. The firm estimates the transaction, priced at seven times Enterprise Value to EBITDA for high-quality renewable assets, could unlock an additional value of ₹57 per share for shareholders. Motilal Oswal maintains a “buy” rating on JSW Energy with a target price of ₹810, indicating a potential upside of nearly 30% from its last closing price.

Meanwhile, global brokerage Investec underscored the transaction’s significance for JSW Energy’s renewable energy strategy. With approximately 2.4 GW of operational capacity and an estimated annual EBITDA of ₹1,500 crore, the deal is seen as a key step forward. However, Investec retained a “hold” rating with a target price of ₹675 per share.