JSW Infrastructure Limited, founded on April 21, 2006, has rapidly emerged as a dynamic leader in India’s port-related infrastructure sector. Over the span of Fiscal 2021 to Fiscal 2023, it achieved remarkable growth in both installed cargo handling capacity and cargo volumes, making it the second-largest commercial port operator in India by capacity in Fiscal 2023. The company’s extensive operations expanded from a single Port Concession in Mormugao, Goa, to an impressive portfolio of nine Port Concessions across India by June 30, 2023, solidifying its status as a diversified maritime ports company.
Moreover, JSW Infrastructure Limited isn’t just focused on port infrastructure; it is evolving into a comprehensive logistics solutions provider. They offer a wide array of maritime-related services, including cargo handling, storage solutions, logistics services, and other value-added services. With an impressive track record of growth and a strategic vision for the future, JSW Infrastructure Limited is poised to play a pivotal role in India’s logistics and infrastructure landscape.
Promoters & Shareholding:
Mr. Sajjan Jindal and Sajjan Jindal Family Trust are the promoters of the company.
| Shareholding Pattern | Pre issue % | Post issue % |
| Promoter and Promoter Group | 96.42 | 85.61 |
| Public & Others | 0 | 11.2 |
| Non-Promoter Non-Public | 3.58 | 3.18 |
| Total | 100 | 100 |
Public Issue Details:
Offer for sale: Fresh of approx. 235,294,118 equity shares at Rs. 2, aggregating up to Rs. 2,800 Cr.
Total IPO Size: Rs. 2,800 Cr.
Price band: Rs. 113 – Rs. 119.
Objective: Prepayment or repayment, in full or part, of all or a portion of certain outstanding borrowings through investment in co’s wholly owned Subsidiaries, JSW Dharamtar Port Private Limited and JSW Jaigarh Port Limited, Financing capital expenditure requirements through investment in wholly owned Subsidiary and General corporate Purposes.
Bid qty: minimum of 126 shares (1 lot) for Rs. 14,994 and maximum of 13 lots.
Offer period: September 25, 2023 – September 27, 2023.
Date of listing: October 6, 2023.
Pros:
- The company experiencing the most rapid growth in the realm of port-related infrastructure and holding the position of India’s second-largest commercial port operator.
- Strategically located assets at close proximity to JSW Group Customers (Related Parties) and industrial clusters supported by a multi-modal evacuation infrastructure.
- Predictable revenues driven by long-term concessions, committed long-term cargo and stable tariffs.
- Diversified operations in terms of cargo profile, geography, and assets.
- Strong financial metrics with a growing margin profile, return metrics and growth.
Risks:
- Depends on government and quasi-governmental agreements for business operation and expansion.
- The profitability of the company could be negatively impacted by a significant reduction or removal of key cargo types it handles.
- Adverse changes in credit ratings assigned to the company may affect its ability to raise funds for future capital requirements.
- Operate in a capital-intensive industry and our current and future expansion plans may require significant capital.
Subscribe or avoid?
Sectorial outlook – The logistics sector in India, as revealed by a 2021 Niti Aayog report, faces substantial challenges characterized by logistics costs accounting for approximately 14% of the country’s GDP. While this presents a notable obstacle, it also unveils compelling investment prospects for those considering participation in the JSW Infrastructure Limited IPO. The company’s strategic positioning within this evolving logistics landscape can be a source of advantage for potential investors.
India’s commitment to addressing these challenges is evident through various government initiatives, including the successful implementation of the Goods and Services Tax (GST), substantial investments in infrastructure, and the ambitious “Sagarmala” program. This program focuses on optimizing port capacity, a key area in which JSW Infrastructure Limited operates. Given the anticipated decline in logistics costs as a percentage of GDP due to these initiatives, JSW Infrastructure Limited stands as a well-prepared entity poised to reap the benefits of this positive transformation in the logistics sector.
The financials (revenue and net profit) are shown in the graph below:
Valuation – For the last 3 years average EPS is Rs. 2.52 and the P/E is around 47x on the upper price band of Rs. 119. The EPS for FY23 is Rs. 3.77 and the P/E is around 28x. If we annualize Q2-FY24 EPS of Rs. 1.78, P/E is around 16x. It has Adani Ports and SEZ Ltd (24.2x) as its listed peer as per the RHP. The company’s P/E is between 28x and 16x. Net margins and EPS have been growing consistently in the last few years. Looking at the valuation, it seems to be available at reasonable valuation.
Recommendation – The JSW Infrastructure Limited IPO presents an enticing investment opportunity in India’s evolving logistics and infrastructure sector. The company has demonstrated impressive growth, becoming the second-largest commercial port operator in India by capacity. Its expansion from one Port Concession to nine across India showcases its diversification and strategic vision.
After considering all the factors the listing still seems fairly priced with good prospects, we would recommend “Subscribe” to this IPO for investors in a medium-term perspective.
Disclaimer:
This article should not be construed as investment advice, please consult your Investment Adviser before making any investment decision.
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