JSW Cement's ₹4,000 Crore IPO Secures SEBI Approval

resr 5paisa Research Team

Last Updated: 14th January 2025 - 03:27 pm

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The Securities and Exchange Board of India (SEBI) has granted approval to JSW Cement, a part of the Sajjan Jindal-led JSW Group, to raise ₹4,000 crore through an initial public offering (IPO).

The IPO will comprise a fresh issue of equity shares amounting to ₹2,000 crore and an offer-for-sale (OFS) of ₹2,000 crore by existing shareholders.

Under the OFS, Synergy Metals Investments Holding Ltd, AP Asia Opportunistic Holdings Pte Ltd, and State Bank of India (SBI) will offload their shares.

JSW Cement initially submitted its draft IPO papers to SEBI in August 2023, followed by another submission in September. However, SEBI temporarily withheld the IPO proposal before granting approval recently. In SEBI's terminology, an “observation” signifies a green light for the company to move forward with the IPO.

Purpose of the IPO

According to the Draft Red Herring Prospectus (DRHP), ₹800 crore from the fresh issue will be used to partially finance the construction of a new integrated cement facility in Nagaur, Rajasthan. Another ₹720 crore will be allocated to reduce the company’s debt burden, while the remaining funds will be utilized for general corporate purposes, which could include working capital and potential expansions. The Nagaur facility is part of JSW Cement’s strategy to strengthen its foothold in the highly competitive northern and western markets of India.

Financial Performance

JSW Cement has demonstrated steady growth in recent years. For FY24, the company’s revenue from operations was ₹6,028.10 crore, compared to ₹5,836.72 crore in FY23 and ₹4,668.57 crore in FY22. However, the profit after tax declined from ₹104 crore in FY23 to ₹62 crore in FY24, reflecting higher operational expenses amid expansions and raw material costs.

Operational Footprint

As of March 2024, JSW Cement’s installed grinding capacity was 20.60 million tonnes per annum (MTPA). The company operates five key manufacturing plants spread across the country: Vijayanagar (Karnataka), Nandyal (Andhra Pradesh), Salboni (West Bengal), Jajpur (Odisha), and Dolvi (Maharashtra). These facilities allow JSW Cement to serve customers across southern, eastern, and western India efficiently. The company also operates a clinker unit in Odisha through its subsidiary, Shiva Cement, enhancing its vertical integration capabilities.

The planned Nagaur plant is expected to boost the company’s overall production capacity significantly and improve cost-efficiency due to its strategic location near key raw material sources. This expansion aligns with the company's goal to increase its capacity to 50 million tonnes per annum (MTPA) in the coming years.

Growth Plans and Industry Position

JSW Cement has been actively increasing its footprint in India’s growing cement market, which is anticipated to witness strong demand due to the government’s focus on infrastructure projects, housing schemes, and industrial growth. The company has been making strides to adopt sustainable production practices, including the use of slag—a byproduct of steel manufacturing—to produce eco-friendly cement, which also helps reduce carbon emissions.

IPO Management

The IPO will be managed by prominent investment banks and financial institutions, including Axis Capital Ltd, JM Financial Ltd, DAM Capital Advisors Ltd, Citigroup Global Markets India Pvt Ltd, Goldman Sachs (India) Securities Pvt Ltd, Kotak Mahindra Capital Company Ltd, SBI Capital Markets Ltd, and Jefferies India Pvt Ltd. Their involvement reflects the scale and importance of the offering in the Indian capital market.

JSW Cement’s IPO is expected to generate strong investor interest, given its established market presence, strategic growth plans, and the backing of the JSW Group, a prominent conglomerate with diversified interests across steel, energy, infrastructure, and cement. If successful, the IPO proceeds will not only strengthen the company’s financial position but also pave the way for further expansion in the competitive Indian cement sector.

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