JSW Infra extends gains after strong listing; zooms 41% over issue price

Shares of JSW Infrastructure moved higher by another 7 per cent to Rs 167.95 on the BSE in Wednesday's intraday trade after the JSW Group company made strong market debut on Tuesday.

Yesterday, the stock closed 32 per cent higher at Rs 157.30 as against its issue price of Rs 119 per cent. With today;s gain, it has rallied 41 per cent over its issue price.

At 10:34 AM, JSW Infra was quoting 4.4 per cent higher at Rs 164.25, as compared to 0.54 per cent decline in the S&P BSE Sensex.

JSW Infra raised Rs 2,800 crore through initial public offering. As outlined in the prospectus, approximately 31 per cent of these proceeds will be allocated toward debt repayment, while another 42 per cent will support capital expenditure for upgrades and expansions at JSW Infra's flagship Jaigarh port and its first container terminal, the JSW Mangalore Container Terminal.

JSW Infra is a leading port operator in India with nine operational port concessions around the country. As of 30 June 2023, the company's total port handling capacity was around 199 million tonnes per annum (MTPA), including an operation and maintenance concession for two terminals of 41 MTPA capacity in the United Arab Emirates.

Post its IPO, 86 per cent of the stake is owned by the promoter and promoter group, while the public and an employees' trust hold 11 per cent and 3 per cent, respectively. Related JSW entities, such as JSW Steel Limited and JSW Energy Limited, are key off-takers for JSW Infra.

JSW Infra provides maritime related services including, cargo handling, storage solutions, logistics services and other value-added services to its customers, and are evolving into an end-to-end logistics solutions provider.

Meanwhile, Moody's Investors Service, on Tuesday, upgraded JSW Infra corporate family rating (CFR) and senior secured bond rating to Ba1 from Ba2, and changed the outlook to stable from positive.

"The upgrade is driven by a combination of the substantial capital raised from JSW Infra’s initial public offering (IPO) and the growth momentum of cargo volumes at both its existing and new ports. We expect JSW Infra to continue its solid operating performance, with its credit metrics consistently within the Ba1 range," said the agency.

The debt reduction is accompanied by the company's solid top-line performance, with a growth rate of 50 per cent in fiscal 2023, which ended on March 31, 2023, up from 46 per cent in FY22.

The growth was primarily due to the addition of new cargo from Jaigarh and Dharamtar ports, driven by JSW Steel Limited's planned capacity expansion near these ports, as well as by the ramp-up of new terminal assets Paradip East Quay Coal Terminal and New Mangalore Container Terminal, Moody’s Investor Services said in its rating rationale.

JSW Infra will likely continue its expansionary growth and substantial capital expenditure, corresponding with the significant demand for infrastructure and rapid GDP growth in India.

Moody's forecasts the company's average capital spending to rise approximately Rs 1,800 crore- Rs 2,000 crore over the next three years. This high level of capital expenditure could subject the company to risks associated with project execution and operational ramp-ups, while also increasing its funding needs. Furthermore, new port concession agreements that involve moderate to high revenue sharing could potentially affect the company's profit margins.