Beaten-down stocks Part 2: Upsides seen in JSW Energy at current valuations

India’s equity market has faltered after two consecutive years of double-digit growth. The BSE benchmark Sensex declined 4.8 per cent in the 12 months ended September 2025 in its weakest showing in more than a decade. By comparison, the index had gained 28.1 per cent in the same period a year earlier, and 14.6 per cent in the preceding 12 months. This means the Sensex has posted negative returns in three of the last six years ended September.

 

One positive outcome of the correction is that it has eased equity valuations from their record peaks in 2024, with several blue-chip counters now trading at more reasonable levels, offering scope for long-term investors. Still, selectivity is key as valuations in the wider market remain higher than historical averages.

 

Against this backdrop, JSW Energy has been notable. The stock has fallen 25.8 per cent over the past year, yet it offers low valuations alongside earnings stability in recent quarters and a return on net worth of 7.9 per cent. This combination provides downside support as well as potential gains when investor sentiment revives. 

 

Why buy JSW Energy?

• Stock performance: The stock has fallen 27 per cent over the year ended September 2025 as investors priced in a slowdown in growth and earnings, even though the company posted strong revenue and profit growth in recent quarters
• Company’s performance: In Q1FY26, net sales rose 78.6 per cent Y-o-Y and net profit increased 42.4 per cent Y-o-Y, aided by acquired assets
• Positive outlook: Analysts remain positive on the stock, citing expansion plans across thermal, wind and solar power. Motilal Oswal Securities expects JSW Energy to reach 30 Gw of generation and 40 GWh of storage capacity by FY30 — nearly double its current size