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Port infra firm JSW Infra made a strong debut on the bourses today, October 3, 2023. The stock listed at ₹143 on NSE and BSE, a premium of 20.17 percent to the issue price of ₹119.
The ₹2,800 crore IPO was open for subscription between September 25 and September 27 at a price band in the range of ₹113-119 per share.
The issue was overall subscribed to 37.37 times. The portion for qualified institutional bidders (QIBs) was booked 57.09 times, while the portion set aside for non-institutional investors saw 15.99 times bidding. The allocation reserved for retail investors was subscribed to a little more than 10.32 times during the bidding process.
The IPO comprised of only a fresh issuance of ₹2,800 crore worth of shares; there's no offer for sale (OFS) component. The company plans to invest the net proceeds from the offering into its fully owned subsidiaries, JSW Dharamtar Port Private Limited and JSW Jaigarh Port Ltd., in order to prepay or repay all or a portion of certain outstanding borrowings.
Ahead of the IPO, JSW Infra raised ₹1,260 crore from 65 anchor investors on Friday allocating 10,58,82,352 shares at a price of ₹119 apiece. The government of Singapore, Monetary Authority of Singapore, Morgan Stanley, Fullerton, HSBC Trustee, TA Global, Master Trust Bank of Japan, Cohesion MK Best Ideas, Goldman Sachs, Theleme India Master Fund and others participated in the anchor book.
Incorporated in 2006, JSW Infrastructure is a part of JSW Group and the fastest-growing port-related infrastructure company that provides maritime-related services including cargo handling storage solutions, logistics services, and other value-added services to its customers which is also evolving into an end-to-end logistics solutions provider.
It is the 2nd largest commercial port operator in India, handling 92.8mn MT in FY23 (43 percent CAGR over FY21-23). 63 percent of volumes are derived from JSW Group customers while the balance 37 percent is from 3rd party customers which it plans to further increase to achieve a balanced customer base.
The company's Revenue and PAT have grown robustly at 41 percent and 62 percent CAGR over FY21-FY23 to ₹3,190 crore and ₹750 crore, respectively, led by strong volume growth. The EBITDA margin on average hovers at 50 percent while RoE stood healthy at 21 percent in this period. Net D/E post repayment would come to -0.2x levels.
Adani Ports and Special Economic Zone Ltd, which has a P/E ratio of 35.95, is the company's only listed industry peer.
JM Financial, Credit Suisse Securities (India), Axis Capital, Dam Capital Advisors, HSBC Securities & Capital Markets, ICICI Securities, Kotak Mahindra Capital Company and SBI Capital Markets were the book-running managers to the issue.
Most brokerage firms had a 'subscribe' recommendation for JSW Infra's IPO citing its strong parentage, robust long-term business model, limited competition, reasonable valuations, and growth prospects for the future. However, uncertainty in traffic at ports, changes in government regulations and environmental concerns are the key risks for the issue.