HSBC Global has issued a buy recommendation for Juniper Green Energy with a target price of ₹330, representing a potential upside from the current market price of ₹267.50. According to latest reports, the brokerage has initiated coverage with a 'Buy' rating and the target price implies approximately 27% upside for investors. On Tuesday, the stock was trading 0.8% higher at ₹267.50 apiece, reflecting positive market sentiment following the recommendation.
Juniper Green Energy operates as a renewable independent power producer that develops and operates utility scale renewable energy projects in India, primarily generating revenue through electricity sales to various off-takers including central and state government-backed entities. As reported by The Hindu BusinessLine, the company currently maintains an installed capacity base of approximately 2GWac and is considered one of the smallest listed pure-play renewable energy players with aggressive growth plans. The company's in-house EPC and O&M capabilities, combined with an experienced team that has executed c800MW of projects at a previous company, position it well to capitalize on sector opportunities.
The company has secured significant future capacity additions through signed contracts and letters of award. According to The Hindu BusinessLine, Juniper Green has signed contracts (PPAs) set to deliver additional capacity of 2.7GWac over the next two years. Additionally, the company has won letters of award that, when signed into PPAs, can result in additional capacity of 3.7GWac, bringing the total portfolio capacity to 8.4GWac. The company maintains surplus connectivity and adequate land, including c12,000 acres and sites for 300 wind turbines for projects already won, improving the certainty of commissioning and reducing execution risks.
HSBC expects Juniper Green's PPAs to generate high-teen IRRs due to attractive tariffs won under complex projects. The brokerage projects that these projects are expected to drive an EBITDA CAGR of 135% over FY26-28. The company's 25-year power purchase agreements (PPAs) with attractive tariffs provide long-term revenue visibility and stability. HSBC's valuation approach is based on FY28 run-rate EBITDA derived from already-signed 25-year PPAs expected to be executed by end-FY28, with the brokerage assigning an 11.5x EV/EBITDA target multiple.
Renewable energy remains a sunrise industry in India, with almost 85% of new power capacity added in the past five years driven by the sector. As reported by The Hindu BusinessLine, recent tenders show that a combination of solar, wind and battery can now mimic the thermal power generation curve while still generating electricity at costs lower than thermal power. However, the brokerage notes that slower commissioning of transmission lines is currently leading to delays in renewable energy projects and curtailment of renewable power. As battery energy storage systems become viable, transmission-related constraints are likely to reduce, which could accelerate the pace of capacity addition and improve project economics.
