JSW Energy Ltd is Rated Sell by MarketsMOJO

Current Rating and Its Significance

MarketsMOJO’s 'Sell' rating for JSW Energy Ltd indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new purchases at this time. This recommendation is based on a comprehensive evaluation of four key parameters: quality, valuation, financial trend, and technicals. The rating was revised on 20 Nov 2025, when the Mojo Score dropped from 57 (Hold) to 35 (Sell), reflecting a significant reassessment of the company’s prospects.

How JSW Energy Looks Today: Quality Assessment

As of 18 February 2026, JSW Energy’s quality grade is assessed as average. The company’s operational efficiency and profitability metrics reveal some concerns. The Return on Capital Employed (ROCE) stands at 7.77%, which is relatively low for a power sector company, indicating limited profitability generated from the capital invested. Similarly, the Return on Equity (ROE) is 7.78%, signalling modest returns for shareholders. These figures suggest that JSW Energy is currently delivering only moderate value from its assets and equity base, which may weigh on investor confidence.

Valuation: A Very Expensive Stock

JSW Energy’s valuation is classified as very expensive. Despite a market capitalisation placing it in the midcap category, the stock trades at a high Enterprise Value to Capital Employed (EV/CE) ratio of 1.6. This elevated valuation multiple implies that investors are paying a premium relative to the company’s capital base. While the stock has generated a 1-year return of 10.68% as of 18 February 2026, this performance is tempered by the company’s flat financial results and the premium valuation, which may limit upside potential. The PEG ratio of 1.6 further suggests that the stock’s price growth is outpacing earnings growth, raising questions about sustainability.

Financial Trend: Flat and Challenging

The financial trend for JSW Energy is currently flat, reflecting a lack of significant growth momentum. The company’s interest expenses have surged by 46.53% over the latest six months, reaching ₹2,902.44 crores, which is a notable increase that pressures profitability. The operating profit to interest coverage ratio is at a low 1.37 times, indicating limited capacity to comfortably service debt obligations. Additionally, the debt-to-equity ratio has risen to 2.37 times as of the half-year mark, signalling a high leverage position. The Debt to EBITDA ratio of 4.35 times further underscores the company’s elevated debt burden, which could constrain financial flexibility and increase risk in a rising interest rate environment.

Technical Outlook: Mildly Bearish

From a technical perspective, JSW Energy’s stock exhibits a mildly bearish trend. Recent price movements show a mixed performance with a 1-day gain of 0.05%, a 1-week rise of 1.10%, but declines over longer periods such as -0.96% in 1 month and -7.49% over 3 months. The 6-month return is also negative at -8.66%, although the year-to-date return is a modest +1.07%. These indicators suggest that while short-term price fluctuations may offer some support, the overall technical momentum remains subdued, aligning with the cautious rating.

Implications for Investors

For investors, the 'Sell' rating on JSW Energy Ltd serves as a signal to carefully evaluate the risks associated with holding or acquiring this stock. The combination of average quality metrics, expensive valuation, flat financial trends, and a mildly bearish technical outlook suggests limited near-term upside and potential downside risks. Investors should consider these factors in the context of their portfolio objectives and risk tolerance, especially given the company’s elevated debt levels and subdued profitability.

Summary of Key Metrics as of 18 February 2026

• Mojo Score: 35.0 (Sell)
• ROCE: 7.77%
• ROE: 7.78%
• Debt to EBITDA: 4.35 times
• Debt to Equity: 2.37 times
• Operating Profit to Interest Coverage: 1.37 times
• 1-Year Stock Return: +10.68%
• PEG Ratio: 1.6

Contextualising JSW Energy’s Position in the Power Sector

Within the power sector, JSW Energy’s current metrics place it at a disadvantage compared to peers that typically demonstrate higher returns on capital and stronger balance sheets. The company’s midcap status means it faces competitive pressures from both larger utilities with greater scale and smaller, more agile players. The elevated debt levels and interest costs are particularly concerning in an environment where capital costs may rise, potentially squeezing margins further. Investors should weigh these sector dynamics alongside the company’s fundamentals when considering their investment stance.

Looking Ahead: What Investors Should Monitor

Going forward, key indicators to watch include any improvement in profitability metrics such as ROCE and ROE, reductions in debt levels or interest expenses, and shifts in valuation multiples that better reflect underlying earnings growth. Additionally, technical signals that indicate a reversal from the current mildly bearish trend could provide early signs of a more favourable investment environment. Until such developments materialise, the 'Sell' rating reflects a prudent approach based on the current data.

Conclusion

JSW Energy Ltd’s 'Sell' rating by MarketsMOJO, last updated on 20 Nov 2025, is grounded in a thorough analysis of the company’s present-day fundamentals, valuation, financial trends, and technical outlook as of 18 February 2026. While the stock has delivered modest returns over the past year, the combination of average quality, expensive valuation, flat financial performance, and subdued technical momentum suggests limited upside and elevated risk. Investors should carefully consider these factors in their decision-making process and monitor key financial and market indicators for any signs of improvement.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →