JSW Infra IPO opens today; should you subscribe?

The initial public offering (IPO) of JSW Infrastructure Ltd will open for subscription today i.e. September 25, 2023. The issue will remain open for subscribers till Wednesday i.e. September 27, 2023. JSW Infra has a fixed price band of ₹113-119 per share for the IPO, which is Sajjan Jindal-led JSW Group’s first public issue in nearly 13 years.

It is a fresh issue of 23.53 crore shares, which at the upper end of the price band will fetch ₹2,800 crore.

On the first day of the opening by 11:44 AM, the issue was subscribed 0.05 times, with bids placed for 66,21,048 shares of the 13,62,83,186 scrips on offer.

The retail individual investors (RIIs) quota has been subscribed 0.23 times, with bids placed for 56,54,376 shares. The non-institutional investors' quota has been subscribed 0.03 times so far. JSW Infra has reserved up to 75% of the issue for qualified institutional buyers, 15% for non-institutional investors, and the remaining 10% for retail investors.

The allotment of shares will be finalised on October 3, 2023, while successful bidders will get the shares credited into their demat accounts on October 5.

Applicants can bid for a minimum of 126 shares and in multiples thereof, which means the minimum and maximum investment amount for retail investors would be ₹14,994 and ₹194,922, respectively. As per SEBI norms, a retail investor is limited to investing only up to ₹2 lakh.

The company intends to use the capital raised from IPO proceeds mainly for repaying debts and expansion of the LPG Terminal Project.

Should you subscribe?

Many analysts have recommended a "subscribe" rating to the IPO, based on the company's good financial performance, including sustained revenue or EBITDA & profit, and fair valuation.

Stoxbox: Subscribe

The stockbroking platform in its note says the company has a track record of sustained Revenue/EBITDA/PAT performance. which grew at a CAGR of 41.2%/42.1%/62.3% during the FY2021-23 period. "On the upper price band, the issue is valued at a P/E of 29.7x based on FY2023 earnings which we feel is fairly valued. We, therefore, recommend a “subscribe” rating for the issue."

Stoxbox also adds that the company also has plans to undertake various greenfield and brownfield expansions in the coming years which would prove beneficial for the business performance going forward.

BP EQUITIES: Subscribe

BP EQUITIES, in its note on the JSW Infra IPO, says the company has a track record of sustained revenue/EBITDA/PAT performance, which grew at a CAGR of 41.2%/42.1%/62.3% during FY2021-23 period.

"On the upper price band, the issue is valued at a P/E of 29.7x based on FY2023 earnings which we feel is fairly valued. We, therefore, recommend a “Subscribe” rating for the issue."

Among risks, it says the company relies on concession and license agreements from government agencies and concession authorities to operate and grow its business. A breach of terms could lead to the termination of agreements.

Mehta Equities: Subscribe

Mehta Equities has also recommended investors “SUBSCRIBE” to JSW Infra IPO offer with a long-term perspective. "Being part of the reputable JSW Group grants JSW Infra vital support and synergies with the group's growing businesses. We think with the strong track record of profitability and growth, JSW Infra is well-positioned to benefit from the continued growth of the Indian economy."

Based on annualised FY24 earnings and fully diluted post-IPO paid-up capital, JSW Infra is asking price a P/E of 19x on the consolidated basis which seems the valuations are reasonably priced when compared to peers which are trading in the range of ~28-30x, it adds.

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