Introduction:
Many companies have launched their Initial Public Offerings (IPOs) recently. However, with markets turning highly volatile, investors have mostly refrained from betting on them. But the JSW Infrastructure IPO, which is the first IPO from the prestigious JSW Group in over a decade, is reversing the trend.
The IPO opened for public subscription on Monday, 25 September 2023, and has already been subscribed to 4.76 times in the retail category. If you’re confused about whether you should invest in the JSW Infrastructure IPO on the last day of bidding, below are the details that can help you.
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About JSW Infrastructure Limited
JWS Infrastructure is India's leading private-sector infrastructure company. Although the company was incorporated in 2006, it has been operating its business since 1999. It offers a range of services, including cargo handling, maritime solutions, storage solutions, and logistics support services. It also develops and operates marine ports, airports, shipyards, townships, and road and railway infrastructure.
The company is a part of the prestigious JSW Group (originally Jindal Group). Regarding cargo handling capacity, JSW Infrastructure is India's second-largest commercial port operator. Besides providing its services at several major ports in Maharashtra, Orissa, Tamil Nadu, Goa, and Karnataka, the company has a presence in the United Arab Emirates (UAE).
As of 31 March 2023, the total cargo handling capacity of JSW Infrastructure stood at 158.43 metric tonnes per annum (MTPA). By 2030, the company aims to double its capacity to 300 MTPA.
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Key Strengths of JSW Infrastructure:
Below are the primary strengths of JSW Infrastructure Ltd. as mentioned in its Red Herring Prospectus (RHP):
- It is the second-largest port operator in India with a cargo handling capacity of 92.8 million MT in FY23
- It offers its services in several Indian ports and two UAE ports
- Plans to expand its revenue through business diversification in the upcoming years
- An excellent track record of consistent financial performance
- The company has achieved a Compound Annual Growth Rate (CAGR) of 41%, 30%, and 29% in the last three financial years
- Well-established relationships with significant clients have resulted in recurring orders
- Belongs to the prestigious JSW Group and boasts a highly experienced management team
Key Risks and Weaknesses Highlighted:
Below are a few risks or weaknesses associated with JSW Infrastructure Ltd.:
- The company relies heavily on government contracts and license agreements
- Coal and iron ore constitute a majority of the cargo the company handles. Reduction or elimination of such cargo can bring adverse effects
- 63% of the revenues come from a core group of clients. Decline in relationships with them can impact the business significantly
- The company is capital-intensive. Shortage of cash flow or working capital can have an adverse impact
- The company has a high net debt, making it prone to rising interest rates
Financial Snapshot of JSW Infrastructure:
Below are the main financials of JSW Infrastructure Ltd. for the last three fiscals. All details are as per the company’s RHP on the Securities and Exchange Board of India (SEBI) website:
*Amount in Rs. Million
The revenue growth has been robust at 40% annually. The company has reported a high net profit of Rs. 7,495 million. It shows its ability to use its resources effectively. The PE ratio too is on the higher side, which makes the IPO extremely attractive.
Details of the IPO:
At its upper price band of Rs. 119 per equity share, JSW Infrastructure IPO plans to raise Rs. 2,800 crores. It is entirely a fresh issue of 235,294,118 equity shares. Up to 75% of the issue has been reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and the remaining 10% for retail investors.
The table below summarises additional IPO details:
To conclude
The JSW Infrastructure IPO appears to offer an appealing opportunity for potential investors. However, it's essential to thoroughly assess the company's underlying financials and the current market environment before committing to an investment. You can easily start investing in IPOs and the stock market from the convenience of your home by opening a free Demat account with Motilal Oswal.
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