JSW Cement IPO Opens: 'Subscribe For Long-Term' Says Anand Rathi — Check Issue Details

JSW Cement's Rs 3,600-crore IPO consists of fresh issue of 10.88 crore shares, worth Rs 1,600 crore, and an offer for sale of 13.61 crore shares worth Rs 2,000 crore.

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Anand Rathi Report

JSW Cement Ltd., the building materials arm of JSW Group launched its initial public offering on Aug. 07 and the issue closes on Aug. 11. The company has set the price band in the range of Rs 139–Rs 147 per equity share, with a face value of Rs 10.

JSW Cement's Rs 3,600-crore IPO consists of fresh issue of 10.88 crore shares, worth Rs 1,600 crore, and an offer for sale of 13.61 crore shares worth Rs 2,000 crore. Investors can place bids starting from a minimum of 102 shares and in multiples thereafter.

JM Financial Ltd., Axis Capital Ltd., Citigroup Global Markets India Pvt. Ltd., DAM Capital Advisors Ltd., Goldman Sachs (India) Securities Pvt. Ltd., Jefferies India Pvt. Ltd., Kotak Mahindra Capital Company Ltd., SBI Capital Markets Ltd. are the book-running lead managers for the public issue. While KFin Technologies is the registrar to the offer.

Objects of the Issue:

1. Part financing the cost of establishing a new integrated cement unit at Nagaur, Rajasthan.

2. Re-payment or pre-payment of term loans, in full or in part, of certain borrowings availed by the company; and

3. General corporate purposes.

Strengths:

• The company is the fastest growing cement manufacturing company in India in terms of increase in installed grinding capacity and sales volume.

• The company is India’s largest manufacturer of GGBS and has a proven track record of scaling up this business.

• Strategically located plants that are well-connected to raw material sources and key consumption markets.

• The company has the lowest carbon dioxide emission intensity among its peer cement manufacturing companies in India and the top global cement manufacturing companies.

• Extensive sales and distribution network in India and focus on strong brand.

• The company benefits from the strong corporate lineage of the JSW Group and its qualified management team.

Key Strategies:

• Create a pan-India footprint by setting up new plants in north and central India, supplemented by expansions in the current regions of operation.

• Continue to deepen presence in existing markets and grow the market share.

• Continue to improve operational efficiency and implement cost reduction measures.

• Continue to focus on sustainable development.

Valuation:

JSW Cement backed by the JSW Group, is launching its IPO with a focus on environmentally friendly "green" cement. Its leadership in eco-friendly products and access to raw materials through group companies provide a competitive advantage.

The company is India’s largest manufacturer of GGBS and has a proven track record of scaling up this business making as a key differentiator with 84% of market share. The company setting up a new unit at Nagaur-Rajasthan that will add to its profitability which will enable them to increase its installed capacity of both clinger and grinding benefitting its subsidiaries to add up to their profitability.

On the valuation front, based on annualized FY25 earnings, a post-issue market capitalization of approximately Rs 2,00,415 million, and at the upper price band of Rs 147, the offer is made at around 36.7 times post-IPO EV/Ebitda (FY25) making the issue appear aggressively priced.

We believe JSW cement with its strong brand, core focus on growing GGBS product line across the North region as well giving the competitive advantage of increasing market share, strategic growth plans in grinding capacity, ease in supply and distribution and alignment with India's sustainable infrastructure push going forward we may see profitability and returns in long run therefore, we recommend a “Susbceibe For Long-Term” rating to the issue

Key Risk:

• Dependence on Limestone Availability and Procurement:

The company’s operations are heavily reliant on the ability to mine or procure adequate quantities of limestone, a key raw material in cement production. Any disruption in the availability of limestone whether due to regulatory restrictions, environmental concerns, supply chain constraints, or inability to secure it on commercially viable terms could adversely affect production capabilities. This, in turn, may have a negative impact on the company’s business operations, financial condition, and overall profitability.

• High Dependence on JSW Group Entities for Key Raw Materials:

The Company is significantly reliant on JSW Steel Limited and its subsidiaries— related parties—for the supply of blast furnace slag, which constitutes 92.93% of the total blast furnace slag consumed in Fiscal 2025. This material is a critical additive in the production of green cementitious products such as ground granulated blast furnace slag (GGBS) and blended cement. Additionally, the company sources a portion of other essential raw materials, including fly ash and clinker, from other JSW Group entities. Any disruption in supply or loss of one or more of these group-affiliated suppliers could materially impact the company’s production processes, adversely affecting its business operations, financial condition, results of operations, and cash flows.

• Dependence on Distribution Network:

The Company relies heavily on its distribution network for the sale and delivery of its products. Any disruption in this network whether due to logistical issues, operational inefficiencies, labor shortages, regulatory hurdles, or adverse weather conditions could hinder product availability in key markets. Such disruptions may negatively impact sales volumes, customer satisfaction, and overall business performance, thereby adversely affecting the company’s results of operations.

• Exposure to End-User Industry Cycles:

The Company’s performance is closely linked to the demand for its products from key end-user sectors such as infrastructure, housing, and industrial/commercial construction. A slowdown or downturn in any of these sectors, due to macroeconomic factors, policy changes, reduced public or private spending, or other external shocks, could lead to lower demand for cement products. This may adversely impact the company’s business growth, revenue generation, and overall results of operations.

• Intense Industry Competition and Technological Advancements:

The cement industry is highly competitive, with numerous established players operating across regions. The company faces competition in terms of pricing, product quality, distribution reach, and brand recognition. Additionally, the development and adoption of new or more efficient cement manufacturing technologies by competitors could further intensify competitive pressures. Failure to effectively respond to such competitive dynamics or technological advancements could result in loss of market share, pricing pressure, and reduced profitability, thereby materially affecting the company’s business and financial performance.

• A grinding unit at Sambalpur, Odisha is currently being constructed by Bhushan Power and Steel, a Group Company, and post commencement of operations this unit is proposed to be transferred to Shiva Cement, the company’s subsidiary. The Supreme Court of India pursuant to its order dated May 2, 2025, has directed for initiation of liquidation proceedings against Bhushan Power and Steel Limited, which has subsequently been stayed by the Supreme Court of India. There can be no assurance that the Sambalpur plant will commence operations within the timeline or at the planned costs and that Bhushan Power and Steel will not be liquidated. Any adverse occurrence in relation to Bhushan Power and Steel or in relation to the Sambalpur may significantly impact the company’s expansion plans.

Click on the attachment to read the full IPO report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.