JSW Cement Files for Rs 4,000 Crore IPO: Fresh Issue and OFS Details Revealed

JSW Cement, part of the Sajjan Jindal-led JSW Group, has officially submitted its DRHP) to the SEBI for a major IPO aiming to raise Rs 4,000 crore. This upcoming IPO marks the biggest public offering in the cement sector since Nuvoco Vistas Corporation’s Rs 5,000 crore IPO in August 2021.

The JSW Cement IPO will include a fresh issue of equity shares worth Rs 2,000 crore and an offer-for-sale (OFS) of Rs 2,000 crore by existing shareholders. Key selling shareholders include AP Asia Opportunistic Holdings Pte and Synergy Metals Investments Holding, each set to sell shares worth Rs 937.5 crore, while the State Bank of India will offload shares worth Rs 125 crore. The average acquisition cost for these shares stands at Rs 65.19 per equity share.

As of the DRHP filing, promoters hold 78% of the company’s shares (assuming full conversion of convertible securities), public shareholders own 19.43%, and Employee Trusts hold 2.57%. The selling shareholders will convert 16 crore compulsory convertible preference shares (CCPS) into 24.54 crore equity shares before the Red Herring Prospectus is filed with the Registrar of Companies (ROC). Post-conversion, AP Asia and Synergy Metals will each hold 9.1%, while State Bank of India will hold 1.21%.

JSW Cement, which had an installed grinding capacity of 20.60 million metric tonnes per annum (MMTPA) and a clinker capacity of 6.44 MMTPA as of March 2024, is considering raising an additional Rs 400 crore through a preferential offer or other methods before the Red Herring Prospectus filing. If achieved, this could reduce the fresh issue size proportionally.

The proceeds from the fresh issue will be allocated as follows: Rs 800 crore to establish a new integrated cement unit in Nagaur, Rajasthan; Rs 720 crore to repay existing debt; and the remainder for general corporate purposes. As of March 2024, JSW Cement’s total indebtedness stood at Rs 5,835.76 crore.

Established in 2009, JSW Cement operates seven plants across India and plans to significantly boost its capacities, with grinding capacity expected to rise from 20.60 MMTPA to 40.85 MMTPA and clinker capacity from 6.44 MMTPA to 13.04 MMTPA. The company aims to achieve a total capacity of 60.00 MMTPA.

In fiscal 2017, JSW Cement acquired Shiva Cement, which operates a clinker unit. Despite a decline in profit to Rs 62 crore for FY24 from Rs 104 crore the previous fiscal, the company reported a 3.3% increase in revenue from operations to Rs 6,028.1 crore. EBITDA grew by 36.9% to Rs 932.9 crore, with margins expanding by 380 basis points to 15.5%.

This IPO follows the JSW Infrastructure IPO launched in October 2023, marking the JSW Group’s first public issue in 13 years. JM Financial, Axis Capital, Citigroup Global Markets India, DAM Capital Advisors, Goldman Sachs (India) Securities, Jefferies India, Kotak Mahindra Capital Company, and SBI Capital Markets are acting as the merchant bankers for the issue.