Shares of JSW Energy Ltd plunged in Tuesday's early trade even as the company reported a strong operational performance for the March 2026 quarter. The stock dropped 8.09 per cent to hit a low of Rs 512.10.

Brokerages largely highlighted robust revenue growth and strong EBITDA expansion. However, concerns over elevated valuations, rising depreciation and interest costs weighed on sentiment.

"JSW Energy reported net revenue of Rs 4,500 crore, which includes one-off revenue of Rs 100 crore. Adjusted revenue came in at Rs 4,400 crore (up 38 per cent YoY/in-line JMFe/9 per cent ahead of consensus) with EBITDA of Rs 2,140 crore (up 78 per cent YoY/2 per cent below JMFe/4 per cent ahead of consensus). Adjusted PAT was Rs 260 crore (down 36 per cent YoY)," JM Financial stated.

"The company is confident of meeting its target of 30GW by 2030 (13.4GW operational, 14GW under-construction, pipeline 4.6GW). We noticed management's refocus on keeping part thermal capacity open and moderating RE capacity addition post guidance of 3GW addition in FY27. The company has made many acquisitions in the recent past and ventured into new capex-heavy projects, resulting in elevated debt levels. However, successful turnaround of the stressed assets is showing symptoms of profitable growth with Net Debt/EBITDA moderating to 6x in FY26 from 7.8x in FY25, and EBITDA/MW and gross block/MW (in INR mn) growing from 5.4 in FY25 to 7.8 in FY26 and 46.7 in FY25 to 56.8 in FY26, respectively, all of which we estimate will gradually improve further," it added.

JM Financial downgraded the stock to 'Add' from 'Buy', citing expensive valuations following the recent rally.

"Given the recent runup, the stock is trading at expensive valuation of 12.5x EBITDA (11.3 historical median) and 2.7x P/B FY28E (2.3 historical median). We downgrade the stock from BUY to ADD with a revised SOTP-based TP of Rs 627 (Rs 614 earlier)," JM stated.

Elara Capital also turned cautious on the stock. "JSW Energy reported strong Q4 FY26 operational performance with revenue and EBITDA growing 41 per cent YoY and 87 per cent YoY respectively, driven by robust capacity additions and a 48 per cent YoY increase in power sales volumes," it said.

The brokerage pointed out that profitability was impacted by higher costs linked to acquisitions and expansion activities.

"However, sharp rise in depreciation and interest costs due to acquisitions and ongoing capex weighed on profitability, leading to a drop in PBT," Elara noted.

"We revise JSW to Accumulate from Buy and raise our TP to Rs 602 from Rs 581 on 11x FY28E EV/EBITDA," it further stated.

Meanwhile, Motilal Oswal Financial Services retained its positive stance on the stock.

"We reiterate our BUY rating with a TP of Rs 640, valuing the company's core renewable business at 12x FY28E EBITDA and its thermal business at 9x Dec'27E EBITDA," it stated.