18 February 2020 JSW Energy (JSWE) has signed a share purchase agreement to acquire GMR Kamalanga (1,050MW). We see the transaction as value accretive for JSWE, given the strategic location of the plant, room for merchant volumes, and the companys ability to reduce interest and O&M; costs post acquisition. We raise our FY21/22 EPS estimates by 15/8% to account for the takeover of Kamalanga from FY21. GMR Kamalanga (3x 350MW) is strategically located in Orissa near the coal belt region. Accordingly, variable costs are low at just INR1.5-1.6/kWh. In terms of PPA, 84% of the plants capacity is tied up under long-term agreements (25 years) with Odisha (263MW), Haryana (334MW) and Bihar (283MW). The balance 170MW is available for sale/merchant. Given the strategic location of the plant, fuel supply linkages are tied for the entire PPA. Besides, the company has recently secured another 0.4mtpa for part of its balance merchant capacity.