JSW Infra soars 8% on Rs 4,119-cr project win from Karnataka government

The stock hit a new high of Rs 220, and was quoting 85 per cent higher against its issue price

Shares of JSW Infrastructure hit a new high of Rs 220 as they rallied 8 per cent on the BSE in Friday's intraday trade, on the back of heavy volumes, after the company said it has received a Letter of Award (LoA) to develop Keni Port in Karnataka for Rs 4,119 crore.

The stock of India’s second largest commercial port company, and part of JSW Group was trading at its highest level since its market debut on October 3.

Currently, JSW Infra was quoting 85 per cent higher against its issue price of Rs 119 per share. A combined 12.6 million equity shares had changed hands on the NSE and BSE till 12:03 PM. In comparison, the S&P BSE Sensex was down 0.15 per cent at 65,886.

In an exchange filing, JSW Infra said the company has emerged as the winning bidder for the development of all-weather, deep-water, greenfield port at Keni in Karnataka on Public Private Partnership basis.

The Karnataka Maritime Board, Government of Karnataka, has issued the LoA to JSW Infrastructure. As per the request for proposal (RFP) document, the estimated cost of the project is Rs 4,119 crore with an initial capacity of 30 million tonnes per annum (MTPA), the company said.

As part of its future growth strategy, the company plans to enhance its overall cargo-handling capacity to 300 MTPA by 2030. It is also strengthening its market position by focusing on value-added offerings with end-to-end logistic support, and a diversified cargo profile.

Meanwhile, in the July to September quarter (Q2FY24), JSW Infra's profit after tax (PAT) jumped 85 per cent year-on-year (Y-o-Y) to Rs 256 crore on the back of strong operational income. Revenue from operations grew 28 per cent Y-o-Y at Rs 848 crore, primarily driven by an increase in volume offtake.

The company's earnings before interest, tax, depreciation, and amortisation (Ebitda) rose 33 per cent Y-o-Y at Rs 499 corre on the back of increased revenue and cost control. Reported Ebitda margin improved 190 bps to 55.8 per cent from 53.9 per cent in the year ago quarter.

Over FY19-23, port traffic at Indian ports increased by 2.8 per cent CAGR. Further, over FY23-28 it is estimated to expand by 3-6 per cent CAGR to 1,730- 1,750 million tonnes. Traffic at major and non-major ports increased by 2.9 per cent and 2.8 per cent CAGR, respectively. Share of major ports in the overall cargo traffic is declining, but with better efficiencies, lower turnaround time and competitive pricing, non-major ports are expanding their share, JSW Infra had said in its Red Herring Prospectus (RHP).

Establishing and operating port infrastructure is capital intensive. Moreover, key success factors for a port operator is residual concession life of the port and the utilization levels. JSW Infra’s domestic cargo handling utilization is around 60 per cent and average residual concession life is around 25 years, which provides long term visibility of revenue streams. Also with JSW Group companies as key customers, there seems to certainty in the long-term cargo volumes for JSWIL. Further, with lean balance sheet post-IPO, JSW Infra is well positioned to participate in the port privatization drive of the government or any inorganic expansion, according to analysts.