Company and IPO Overview:
JSW Infrastructure Limited (JSWIL) is the second largest commercial port operator in India (in terms of cargo handling capacity in FY23). JSW Infrastructure provides maritime-related services including, cargo handling, storage solutions and logistics services. The company develops and operates ports and port terminals under Port Concessions.
JSW Infrastructure currently handle various types of cargo, including dry bulk, break bulk, liquid bulk, gases and containers. The company currently handling cargo also include thermal coal, coal (other than thermal coal), iron ore, sugar, urea, steel products, rock phosphate, molasses, gypsum, barites, laterites, edible oil, LNG, LPG, and containers. JSW Infrastructure ports and port terminals typically have long concession periods ranging between 30 to 50 years, providing the company with long-term visibility of revenue streams.
It is a member of the JSW Group, a multinational conglomerate that owns a wide range of assets in different sectors. These sectors include steel, energy, infrastructure, cement, paints, venture capital, and sports. Being part of the group, the company initially received cargo from group customers (steel and energy). This helped in the smooth ramp-up of their assets and better utilization of their capacities. JSWIL’s cargo handling systems are mostly mechanized, leading to fast turnaround times and efficient resource utilization.
The goal is to boost its market share in India’s port and logistics infrastructure sector. JSWIL aims to achieve operational capacities of up to 300 million metric tons per annum (MTPA) across their ports and terminals by 2030.
An IPO from JSW group is marking its opening after a gap of 13+ years. JSW Infrastructure IPO is the next main board IPO which is ready to go public, the company is about to raise around ₹ 2800 crores via IPO comprising Fresh Issue only. The price band of the issue is ₹ 113 to ₹ 119 with a minimum market lot of 126 shares. JSW Infrastructure IPO subscription quota for retail is 10.00%, NII is 15.00% and QIB is 75.00%.
Financials (rounded off):
Date | Total Revenue (₹ in cr) | PAT (₹ in cr) |
31/03/2021 | 1678 | 285 |
31/03/2022 | 2379 | 330 |
31/03/2023 | 3373 | 750 |
Objectives of the Issue:
1. Repaying certain outstanding borrowings by investing in their wholly-owned subsidiaries, JSW Dharamtar Port Private Ltd and JSW Jaigarh Port Ltd.
2. Financing the capital expenditure needs of their wholly-owned subsidiary, JSW Jaigarh Port Ltd, for planned expansion and upgrading activities at Jaigarh Port. This includes expanding the LPG terminal (2 MTPA), setting up an electric substation, and acquiring and installing a dredger.
3. Financing the capital expenditure requirements of their wholly-owned subsidiary, JSW Mangalore Container Terminal Private Ltd, for an expansion project at Mangalore Container Terminal.
IPO Details:
IPO Date | 25/09/2023-27/09/2023 |
Face Value | ₹2 per share |
IPO Price Band | ₹113-₹119 per share |
IPO Lot Size | 126 Shares |
Listing at | NSE, BSE |
Basis of Allotment | 03/10/2023 |
Credit of Shares in Demat | 05/10/2023 |
Listing Date | 06/10/2023 |
Pre-Issue Shareholding | 96.42% |
Post-Issue Shareholding | - |
Retail Minimum Lot Size | 126 shares (₹14,994) |
Important things to note about the Company:
Top reasons to consider the IPO:
1. JSW Infrastructure is the fastest growing port-related infrastructure company and JSW Infrastructure is the second largest commercial port operator in India operating nine port concessions with an installed cargo handling capacity of 158 MTPA as of 30 June 2023.
2. JSW Infrastructure has shown predictable revenues driven by long-term concessions as port concessions are long life assets with concession periods typically ranging between 30 to 50 years. (Concessions are contracts wherein the government gives operating rights to private enterprises).
3. Port concessions located closely to JSW Group Customers (Related Parties) and industrial clusters. These advantages accounted for 64% of the total cargo handled in the three month period ended 31 June 2023 as it came from JSW Group Customers and long-term third party customers.
4. The infrastructure company has shown consistent financial growth in recent years with EBITDA margins of 53%, 51% and 53% in FY21, FY22 and FY23, respectively.
Risk Factors to watch out in the IPO:
1. JSW Infrastructure Operates in a capital intensive industry which accounted for the capital expenditure of ₹344 crore, ₹1,451 crore and ₹245 crore in FY21, FY22 and FY23 respectively.
2. Total borrowings of JSW Infrastructure amounts to ₹4,228 crore as of 30 June 2023.
3. Experienced capacity utilization is of 35%, 38% and 56% in FY21, FY22 and FY23, respectively. The company might suffer if present capacity utilization cannot be maintained or increased.
4. JSW Infrastructure Depends on licensing and concession agreements with governmental and quasi-governmental agencies to run and expand the business.
Crisp Insights:
JSW Infrastructure IPO GMP Today: The Company is commanding a GMP of 10%.
JSW Infrastructure Gems GMP is weak and hence, investors need to be careful.
JSW Infrastructure IPO Review: JSW Infrastructure is well placed to capture non-major ports growth and has (a) captive volumes from group companies as well as (b) expansion plans which will increase revenue visibility. It has posted steady growth in its top and bottom lines for the reported periods. Based on annualized FY24 earnings, the issue appears reasonably priced. Investors may subscribe for listing gains and may also consider parking funds for the medium to long term.
Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.
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