JSW Cement to launch 4,000-cr IPO in 2024

Parth Jindal, managing director of JSW Cement.  (Mint)
Parth Jindal, managing director of JSW Cement. (Mint)

Summary

  • The firm plans to utilize IPO proceeds to fund its expansion plan

JSW Cement is planning an initial public offering (IPO) in 2024 to raise as much as 4,000 crore, Parth Jindal, managing director of JSW Cement Ltd, said in an interview.

“In 2024, we are planning to take this company public, for which we will be filing the DRHP (draft red herring prospectus) in the next six months. We will be timing the market listing after the national elections," Jindal added.

“We plan to raise 3,500-4,000 crore through the IPO route. We are looking at diluting 10-15% in round one, and then over the next two years, dilute the entire 25% that we are obligated to do under the Sebi (Securities Exchange Board of India) guidelines. It will give us enough ammunition to fulfil our organic ambitions."

In 2020, the $23 billion JSW Group had initiated plans for an IPO for its cement venture but subsequently decided to postpone it to December 2022 in the wake of the pandemic-hit disruptions in its supply chains and muted demand. However, the company did not revive the IPO plans then.

The company plans to utilize the proceeds of the IPO to fund its expansion plans, and increase capacity from the existing 21 million tonnes to 60 million tonnes in five years. It will be requiring 18,000 crore to increase capacity.

While over 20% of its total capital expenditure will come through the IPO, it plans to use its internal accruals as well as raise debt to fund its expansion plans.

“The rest will come through internal accruals and then, we will fund it through debt. And, as and when required, we can always do a follow-on round in the public markets. We can raise a bond; we can do a QIP (qualified institutional placement). So, once we are public, we will have a lot more options at our disposal," he added.

The company already has two large private equity backers -- Apollo Global and Synergy Metals.

“They are willing to partner with us if we look at acquisitions. Apart from them, we are always open to working with private equity funds to look at opportunities. That option is also there," Jindal said.

Since Jindal took over the reins in 2016, JSW Cement has raised its capacity from 6 million tonnes to 19 million tonnes, and is set to achieve 21 million tonnes by December.

Jindal said his ambition is to be among the top five entities across all the business segments he manages, including cement, paints and sports. “JSW Cement can achieve 60 million tonnes in next five years, then we will be the fifth player in India. The 40 million tonnes we are adding at 18,000 crore works out to about $60 per tonne. This is the lowest cost possible, and I don’t think one can get an acquisition at that cost."

“Our goal is it to at least have 10% market share by 2030. So, within seven years, it should be close to 75 million tonnes. We also want to be the world’s greenest cement firm as achieve that capacity."

Jindal has similar plans for the paints and sports businesses as well.

Of late, the cement manufacturer has reported promising top-line and bottom-line growth, with the Ebitda (earnings before interest, taxes, depreciation, and amortization) margin at 18-19%. “By the end of this year, we will be around 7,500 crore in terms of top line. We are doing roughly an Ebitda margin of 18 to 19%. We are profitable, and we should make a PBT (profit before tax) of around 750 crore," Jindal said.

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