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Salient features of the IPO:

* Commercial port operator, JSW Infrastructure Ltd. (JSWIL), a group company of JSW Group is coming up with an IPO to raise around Rs. 2,800cr, which opens on 25th Sept. and closes on 27th Sept. 2023. The price band is Rs. 113 - 119 per share.

* The IPO consists of only fresh issue of shares amounting to Rs. 2,800cr. From the fresh issue net proceeds, JSWIL will be utilizing Rs. 1,029cr for financing the expansion/upgradation plans at the Jaigarh Port; Rs. 880cr will be used for the repayment/pre-payment of the debt and Rs. 151cr will be utilized for financing the expansion plans at the Mangalore Container Terminal. Residual funds will be used for general corporate purposes.

* Post-issue, promoter & promoter group (P&PG) will have 85.47% stake, compared to 96.42% pre-IPO. Consequently, public shareholding will increase from nil to 11.35%.

Key competitive strengths:

* Fastest growing port-related infrastructure company and 2 nd largest commercial port operator in India

* 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 longterm cargo and stable tariffs

* Diversified operations in terms of cargo profile, geography and assets

* Demonstrated project development, execution and operational capabilities

* Benefit from strong corporate lineage of the JSW Group and a qualified & experienced management team

* Strong financial metrics with a growing margin profile, return metrics and growth

Risk and concerns:

* General slowdown in the global economic activities

* Unfavorable government policies & regulations

* Significant reliance on group companies for business

* Capital intensive operations

* Delay and cost over-run across the expansion projects

* Difficulty in maintaining the profitability

* Competition

Below are the key highlights of the company: 

* With a coastline of around 7,500km spanning across the Bay-of-Bengal, Indian Ocean and Arabian Sea, India is at commercially enviable location on the global map. Ports in India handle 90% by volume and 70% by value of India’s external trade. The maritime route is used to import crude petroleum, iron ore, coal, and other critical goods. Additionally, India has an extensive network of inland waterways (in the form of rivers, canals, backwaters, and creeks) of around 20,275km spread across 24 states in the country. The Indian port sector is divided into two segments: major ports and non-major ports. As of 31st Dec. 2022, the Indian coastline had 12 major and nearly 217 non-major ports. Major ports are administered directly by central government, whereas non-major ports fall under the jurisdiction of state governments.

* Over FY19-23, port traffic at Indian ports increased by 2.8% CAGR. Further, over FY23-28 it is estimated to expand by 3-6% CAGR to 1,730- 1,750mn tonnes. Traffic at major and non-major ports increased by 2.9% and 2.8% CAGR, respectively. Share of major ports in the overall cargo traffic is declining, however, with better efficiencies, lower turnaround time and competitive pricing, non-major ports are expanding their share (Source: RHP). 

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