JSW Infrastructure IPO Review: JSW Infrastructure is coming up with the IPO which is set to be listed on the NSE and BSE. The IPO will be open for subscription on 25th September 2023, and closes on 27th September 2023.
This article will provide a comprehensive JSW Infrastructure IPO Review, including an in-depth analysis of the company’s financials, GMP, as well as the strengths and weaknesses of JSW Infrastructure. Keep reading for more details!
Table of Contents
JSW Infrastructure IPO Review – About The Company
JSW Infrastructure, a part of the JSW Group, was incorporated in 2006 as a port-related infrastructure company. It provides maritime services, cargo handling, storage solutions, logistics services, and other value-added services. From Fiscal 2021 to 2023, it saw significant growth in installed cargo handling capacity and cargo volumes handled, making it the second largest commercial port operator in India in Fiscal 2023.
The company operates nine Port Concessions in India with an installed cargo handling capacity of 158.43 MTPA. It also operates two port terminals under O&M agreements in the UAE with a cargo handling capability of 41 MTPA as of June 30, 2023. This makes JSW Infrastructure a diversified maritime ports company.
The company’s handling capacity grew at a CAGR of 15.27% from 119.23 MTPA in March 2021 to 158.43 MTPA in March 2023. Its services include marine services like piloting and mooring, stevedoring services for loading and unloading cargo, intra-carting services for cargo transport, storage and handling services for various types of cargo, and evacuation services for cargo movement.
In terms of revenue, it comes from operations including providing cargo handling, storage and related services to JSW Group Customer which contributes 51.02% and third party customers contributes 33.68%. Vessel related charges generate 15.30% of the revenue.
JSW Infrastructure IPO – Industry Overview
India’s share in global exports of goods and services has seen a rise from 2.1% in 2016 to 2.5% in 2022, indicating a robust growth in the export sector. This growth has been facilitated by several key reforms introduced by the government, including the introduction of the PLI scheme, lower corporate tax rates, simplification of labor legislation, and a greater focus on human capital. The government’s aim is to transform India into an export hub.
The Indian Logistics Market, a rapidly growing sector, is projected to reach USD 650.52 Bn by 2028 from an estimated USD 435.43 Bn in 2023, growing at a CAGR of 8.36%. The market size of key segments such as road transport, rail transport, warehousing, cold chain logistics, and rail freight terminals was approximately Rs 13 trillion in Fiscal 2022.
The Sagarmala programme is a significant initiative that aims to enhance India’s port capacity to over 3,300 MTPA by 2025. This includes a capacity of 2,219 MTPA at Major Ports and 1,132 MTPA at Non-Major Ports by 2024 – 2025. The programme encompasses 14 projects related to the development of new ports with an estimated investment of Rs 1,257.76 billion.
India’s port market is one of the largest and fastest-growing globally. It handles 90% by volume and 70% by value of India’s external trade. The maritime route is primarily used for importing critical goods like crude petroleum, iron ore, coal. Growth at Indian ports is expected to be between 3% and 6% over Fiscals 2024 to 2028.
India’s strategic location in the Indian Ocean region provides an advantage as it supports approximately 80% of global maritime oil trade. The Indian government plays a crucial role in the development of the port industry through policies like allowing up to 100% FDI for port and harbour building and maintenance projects, providing a ten-year tax break for businesses that create, maintain, and operate ports, inland waterways, and inland ports.
These sectors are vital for the country’s economic activities and are expected to continue growing in the coming years.
JSW Infrastructure IPO Review – Financial Highlights
Examining the financial highlights of JSW Infrastructure, it’s observed that the company’s operational revenue has seen a substantial rise, escalating from ₹1603 crore in March 2021 to ₹3194 crore in March 2023. The Profit After Tax (PAT) also witnessed growth, increasing from ₹284 crore in March 2021 to ₹749 crore in March 2023.
While the company’s borrowings have seen a slight uptick, moving from ₹3945 crore in March 2021 to ₹4243 crore in March 2023, the Debt to Equity ratio has notably decreased from 1.17 in March 2021 to 0.54 in March 2023, indicating a healthier financial position.
In terms of financial ratios, the company has reported a Return on Equity (ROE) of 18.33% and a Return on Capital Employed (ROCE) of 19.49%.
Financial Metrics
(Source: RHP of the company)
Competitors of JSW Infrastructure :
Adani Ports and SEZ Limited, a listed peer of the company, operates in the port sector with a similar range of services. In the unlisted segment, key port operators in India include JM Baxi, DP World, PSA International, and APM Terminals. These entities primarily manage container terminals at various ports.
Strengths of the company :
- The company’s ports are strategically located on the west and east coasts of India, providing easy access to major shipping routes. This location advantage translates into cost savings for importers and exporters.
- JSW Infrastructure has secured long-term contracts with JSW Group Customers for cargo handling services at their Port Concessions, ensuring long-term visibility of cargo and revenue.
- The company operates in multi-cargo ports and port terminals that handle various types of cargo including coal, fluxes and iron ore, sugar, urea, steel products, rock phosphate, molasses, gypsum, barytes, laterites, and edible oil.
- JSW Infrastructure has developed its portfolio to cater to both exports and imports, and has won numerous bids for developing and operating terminals.
- The company’s cargo handling systems are largely mechanized, enabling quick turnaround times and efficient use of resources.
Weaknesses of the company:
- JSW Infrastructure’s operations and growth are heavily dependent on government concession and license agreements. Any breach of these agreements could lead to termination, adversely affecting the company’s operations.
- Delays in project completion may result in the concessioning authority claiming liquidated damages, which could impact the company’s financial stability.
- The company handles a substantial volume of coal and iron ore cargo. A significant reduction or elimination of such cargo could negatively affect its profitability.
- JSW Infrastructure has numerous related party transactions with entities in the JSW Group, generating a majority of its revenue from them. This heavy concentration and dependence could potentially affect business revenue.
- The company operates in a capital-intensive industry, and its expansion plans may require significant capital. There’s a risk that the company may be unable to raise this capital, and its investments in additional services and facilities may not be successful.
JSW Infrastructure IPO Review – GMP
The IPO for JSW Infrastructure is set at a price band of ₹113-₹119. The latest grey market price stands at ₹15. The IPO is projected to list at a premium of 12.61%, with an estimated listing price of ₹134.
JSW Infrastructure IPO Review – Key IPO Information
| PARTICULARS | DETAILS |
|---|---|
| IPO Size | 2800Cr |
| Fresh Issue | 2800Cr |
| opening date | 25th september 2023 |
| closing date | 27th september 2023 |
| face value | ₹2 per share |
| price band | ₹113 to ₹119 per share |
| lot size | 126 shares |
| Minimum lot | 1 (126 shares) |
| maximum lot | 13 (1638 shares) |
| Investment amount | ₹14,994 |
| listing date | 6th october 2023 |
Promoters: Sajjan Jindal and Sajjan Jindal Family Trust are the Promoters of the company.
Book Running Lead Manager:
- Kotak Mahindra Capital Company Ltd
- ICICI Securities Ltd
- JM Financial Ltd
- SBI Capital Markets Ltd
- Dam Capital Advisors Ltd
- HSBC Securities & Capital Markets Pvt Ltd
- Credit Suisse Securities (India) Pvt Ltd
- Axis Capital Ltd
Registrar to the Offer: Kfin technologies limited
The Objective of the Issue:
The company intends to utilize the net proceeds from the issue towards the funding of the following objects:
- Prepayment or repayment, in full or part, of all or a portion of certain outstanding borrowings through investment in the wholly owned Subsidiaries, JSW Dharamtar Port Private Limited and JSW Jaigarh Port Limited.
- Financing capital expenditure requirements through investment in the wholly owned subsidiary, JSW Jaigarh Port Limited, for proposed expansion/upgradation works at Jaigarh Port i.e, for expansion of LPG terminal project, setting up an electric sub-station, purchase and installation of dredger.
- Financing capital expenditure requirements through investment in the wholly owned subsidiary, JSW Mangalore Container Terminal Private Limited, for the proposed expansion at Mangalore Container Terminal.
- General corporate purposes.
In Closing
JSW Infrastructure, with its vast experience and operational scale, is well-positioned to capitalize on larger Port Concessions and strengthen its foothold in the Indian maritime infrastructure industry. Its strategy of cargo diversification provides resilience against market fluctuations and attracts large shipping lines.
The company remains committed to growth through greenfield and brownfield expansions, and similar business acquisitions.
What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.
Written By Niharika Jadhav
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