JSW Cement gets SEBI approval for ₹4,000 crore IPO

Sajjan Jindal-promoted JSW Cement has reportedly received final observation from the capital market regulator Securities and Exchange Board of India (SEBI) to raise ₹4,000 crore via an initial public offering (IPO) route. The cement company had filed IPO document with the regulator on August 16, 2024. In September, the SEBI had temporarily halted the approval process due to a pending proceeding involving the promoter family.

This is going to be the first major public offering in the cement space since Nuvoco Vistas' ₹5,000 crore issue in August 2021. Also, this will become the fourth company of the steel-to-power conglomerate to get listed on the domestic bourses after JSW Infrastructure in October last year.

The IPO is coming at a time when the cement industry is battling with subdued demand due to prolonged rainfall, delays in budgetary allocations for infrastructure projects, and labour shortages. This was observed even as cement prices hit multi-quarter lows. After a subdued H1FY25, demand conditions have strengthened and are likely to remain robust, as Q4 is typically a strong period for cement consumption, supported by higher institutional demand and sustained momentum in the housing and real estate sectors.

JSW Cement’s IPO is a mixture of a fresh issue of equity shares worth ₹2,000 crore of face value of ₹10 each and another ₹2,000 crore through an offer for sale (OFS) by existing shareholders. Under the OFS, AP Asia Opportunistic Holdings Pte. Ltd. and Synergy Metals Investments Holding will offload shares worth ₹937.50 crore each, while State Bank of India (SBI) will pare stock worth ₹125 crore.

Out of the proposed ₹2,000 crore fresh equity capital, the company intends to use ₹800 crore for funding the cost of establishing a new integrated cement unit at Nagaur (Rajasthan), and ₹720 crore to repay debts availed by it. A part of the capital will be utilised to meet general corporate purposes. As of March 31, 2024, the total debt under the various financing arrangements of the company stood at ₹5,835.76 crore.

As per the DRHP, the company plans to set up a greenfield integrated cement unit at Nagaur, consisting of clinker capacity of 3.30 Million tonnes per annum (MTPA) along with grinding capacity of 2.50 MTPA. The Nagaur project will utilise limestone to manufacture clinker which shall further be milled to produce ordinary portland cement (OPC) and portland pozzolana cement (PPC).

Earlier in May this year, Parth Jindal, Managing Director of JSW Cement, had unveiled a plan to invest approximately ₹3,000 crore in establishing a cement plant in Nagaur, to be financed through a mix of equity and long-term debt. Besides, in February this year, the company had announced plans to establish mega projects in Odisha, including a 10 MTPA cement plant, a 900 MW power plant, a 52 MTPA greenfield jetty port, and a 13.2 MTPA steel plant. This venture was slated to involve a cumulative investment of ₹65,000 crore.

Currently, JSW Cement has plants in Karnataka's Vijayanagar, Andhra Pradesh's Nandyal, West Bengal's Salboni, Odisha's Jajpur, and Maharashtra's Dolvi.

Last evening, three companies - Regreen Excel EPC India, Dr. Agarwal’s Health Care, and Casagrand Premier Builder – also received nod from the SEBI to launch their IPOs. Temasek Holdings and TPG-backed eye care services provider Dr. Agarwal Health Care had filed its IPO papers with SEBI on September 27, 2024. Regreen-Excel EPC India Limited, engaged in designing, manufacturing and supplying ethanol plants, filed its DRHP with the SEBI on September 9, 2024. On the other hand, real estate company Casagrand Premier Builder submitted its IPO papers on filed on September 19, 2024.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)