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JSW One expects to break-even by FY27, fuelled by GMV surge

India’s construction sector is poised to achieve a valuation of $1.4 trillion by 2025. (Photo: Courtesy company website)
India’s construction sector is poised to achieve a valuation of $1.4 trillion by 2025. (Photo: Courtesy company website)

Summary

  • The firm has enough cash to fund expansion for the next 24 months

NEW DELHI : JSW One Platforms Ltd, the tech venture of the JSW Group, aims to achieve break-even within two years, after having quadrupled its gross merchandise value (GMV) since last year, said chief executive Gaurav Sachdeva.

“So, we will break-even...somewhere closer to FY26. When we say break-even, it is not Ebitda (earnings before interest, taxes, depreciation, and amortization) break-even, but PBT (profit before tax) break-even. So, on a PBT basis, we should be somewhere closer to the last quarter of FY26, or the full year of FY27," he said in an interview.

The manufacturing segment has started making money but investments in other segments and expenses on account of expanding into new markets will require cash, he added. “Manufacturing, which is 75-80% of our business, is profitable, and runs on its own. Today, capital is being used to build others. So, overall, we have given guidance that FY27 is the first year we will be profitable."

The firm has enough cash to fund its expansion for the next 24 months, Sachdeva said.

The JSW One integrated technology platform hosts JSW One MSMEs and JSW One Homes, and operates in both domains, facilitating the sale of stainless steel, cement products, and flat and long steel to micro, small, and medium enterprises, in addition to running a home construction unit. The platform expects a fourfold increase in GMV over last year. “We are targeting about 700 crore monthly GMV by March 2024. But our internal target is to exit March with over 700 crore monthly GMV. That will give us a billion-dollar exit run rate." The company also plans to hit the $5 billion GMV by 2026-27.

This firm’s expansion coincides with the plans of cement manufacturers such as Ambuja and ACC, which are looking to cut their number of distributors from 12 to three in South Gujarat, home to half of small and medium industries. The plan is to implement a similar strategy pan-India. JSW One MSME have access to materials from most companies on its platform through its network of distributors or sellers.

The company plans to direct its funds to other business verticals such as construction, which are yet to be profitable. “We have 100 homes under construction, which is about 60 crore of services and products, or the order book GMV of this platform. We get about 50 homes in design stage every month which is around 15 crore of projected GMV," Sachdeva said.

The home construction business, he added, may not be a big revenue generator as its e-commerce arm, but it is trying to target tier-II, III, and IV cities where major housing problem exists, and where people are building G-plus 1 (ground + 1 floor), G-plus 2 homes. The construction business is still in its nascent stage, while manufacturing contributes 80% to the business.

India’s construction sector is poised to achieve a valuation of $1.4 trillion by 2025. The catalysts for this growth are cities with urban population estimated to contribute 75% to gross domestic product (GDP) compared with the current 63%, and the 68 cities having a population exceeding 1 million. The construction sector in India spans 250 sub-sectors with linkages across sectors.

Following its latest funding round in March, the company is valued at 2,800 crore. Mitsui holds 7.5% equity, the JSW Group owns 82.5%, and the company’s employees have 10% through the employee stock option plan (Esop).

The company, Sachdeva said, does not require new funding for the next two years as the group continues to fund its expansion from internal accruals.

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