JSW Infra IPO opens today: GMP, review, other key details to know. Should you subscribe?

JSW Infrastructure Limited IPO has reserved not less than 75% of the shares in the public issue for Qualified Institutional Buyers (QIB), not more than 15% for Non Institutional Investors (NII), and not more than 10% of the offer is reserved for Retail Investors.

JSW Infra IPO lot size is 126 equity shares and in multiples of 126 equity shares thereafter.

Adani Ports and Special Economic Zone Ltd, which has a P/E ratio of 35.95, is the company’s listed industry peer.

JSW Infra IPO subscription status was 43% on day 1. JSW Infra IPO’s retail investors portion was subscribed 1.38 times, NII portion was subscribed 60%, and Qualified Institutional Buyers (QIB) portion was subscribed 3%.

JSW Infrastructure IPO details

JSW Infra IPO comprises a fresh issuance of ₹2,800 crore worth of shares, there’s no offer for sale (OFS) component.

According to Red Herring Prospectus (RHP), 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.

The company also intends to finance capital expenditure requirements through investment in its wholly owned subsidiary, JSW Jaigarh Port Ltd, for proposed expansion/upgradation works at Jaigarh Port, including the expansion of the LPG terminal, the establishment of an electric sub-station, and the purchase and installation of a dredger.

JM Financial Ltd, Axis Capital Ltd, Credit Suisse Securities (India) Private Ltd, DAM Capital Advisors Ltd, HSBC Securities and Capital Markets (India) Private Ltd, ICICI Securities Ltd, Kotak Mahindra Capital Company Ltd, and SBI Capital Market Ltd are the book running lead managers to the Offer. KFin Technologies Ltd is the offer’s registrar.

JSW Infra IPO Review

In its analysis, Canara Bank Securities noted that JSW Infrastructure Limited, in terms of growth in installed cargo handling capacity and cargo volumes handled between Fiscal 2021 and Fiscal 2023, is the port-related infrastructure company that is expanding the fastest. They suggest building a port in Jatadhar to serve the future steel factory in Odisha for JSW Steel Limited. They anticipate that the expansion of the JSW Group’s numerous companies will continue to be advantageous to them.

“Company’s revenue and EBIDTA shows growth of 41% and 42% respectively in terms of 2 year CAGR. EBIDTA Margins have remained steady at 53% despite a fall in FY2022. This issue is available at P/EPS of 28.88x which appears reasonably priced as the company’s revenue visibility is strong for future with steady margins. Hence, we recommend to subscribe the issue for listing gains and long term,” said brokerage in its report.

Choice Equity Broking believes that at the upper price range, JSW Infrastructure Limited is asking for a TTM P/E multiple of 28.7x (to its TTM earnings per share of ₹4.1), which is is in-line to only listed peer company.

Infrastructure for ports requires significant investment to build and run. Additionally, the port’s remaining concession life and usage rates are crucial success factors for port operators. Domestic freight handling at JSW Infrastructure Limited is utilised to about 60% of capacity, and the typical residual concession life is about 25 years, providing long-term visibility of revenue sources.

“Also with JSW Group companies as key customers, there seems to certainty in the long-term cargo volumes for JSWIL. Further, with lean balance sheet post-IPO, JSWIL is well positioned to participate in the port privatisation drive of the government or any inorganic expansion. Thus, we assign a ‘Subscribe’ rating for the issue,” explained the brokerage. 

Given its dominating position among Indian port operators, large cargo profile, and diversified geographic footprint, brokerage Motilal Oswal Financial Services, favours JSW Infra IPO.

“The issue is valued at 19x 1QFY24 P/E on annualised and diluted basis, which looks attractive. We believe JSW infra could benefit from the government focus on port development, limited competition and strong parentage. Hence we recommend Subscribe,” the brokerage said.

Reliance Securities claims that the Make in India and China+1 themes will continue to drive superior growth strategies and that the Indian economy is on an explosive growth trajectory that supports increased EXIM trades. The cargo traffic increased by 1.7% in FY23, and major port traffic is anticipated to increase by 3-6%. This steady growth will be supported by predictable income derived from long-term concessions and stable tariffs throughout the course of FY24–28.

“JSW Infrastructure has demonstrated a track record of execution over the past few years and benefit from the strong corporate lineage with a professional team, capacity expansion and diversification in similar business will increase revenue diversification and create value for the shareholders. Therefore we recommend a ‘Subscribe’ to the issue,” added the brokerage. 

JSW Infra IPO GMP today

JSW Infrastructure IPO GMP today or or grey market premium is +18 similar to the previous trading session. This indicates JSW Infra share price were trading at a premium of ₹18 in the grey market on Monday, according to topsharebrokers.com

Considering the upper end of the JSW Infrastructure Limited IPO price band and the current premium in the grey market, the estimated listing price of JSW Infra share price is ₹137 apiece, which is 15.13% higher than the IPO price of ₹119.

‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.