JSW Cement plans to raise ₹400 crore before going public
What's the story
JSW Cement, a prominent player in the Indian cement industry, is contemplating a pre-initial public offering (IPO) placement to raise up to ₹400 crore. This information was disclosed in the company's draft red herring prospectus (DRHP). The Sajjan Jindal-led firm has also filed preliminary documents with the Securities and Exchange Board of India (SEBI), for a ₹4,000 crore IPO.
Funding breakdown
IPO structure and pre-IPO placement details
The proposed IPO will comprise a fresh issuance of equity stocks and an offer for sale (OFS) by existing investors, each valued at ₹2,000 crore. The pre-IPO placement is capped at 20% of the fresh issue and will be deducted from the total fresh issue. The DRHP stated that new stocks could be issued through a preferential offer or any other approved method.
Allocation strategy
Expansion plans and debt reduction
JSW Cement plans to allocate ₹800 crore from the net proceeds of the fresh issue, to establish a new integrated cement unit in Nagaur, Rajasthan. An additional ₹720 crore will be used to reduce its existing debt, which stood at ₹5,835.76 crore as of March 2024. The remaining funds will be utilized for general corporate purposes.
Market impact
JSW Cement's IPO: A significant event in cement industry
JSW Cement's IPO is a significant event as it marks the group's second major listing following a 13-year hiatus. It will also be the first major public issue in the cement industry, since Nuvoco Vistas Corporation's ₹5,000 crore IPO in August 2021. The company operates seven plants across India and wants to double its installed grinding capacity from 20.60 million metric tons per annum (mmtpa) to 40.85mmtpa, and its installed clinker capacity from 6.44mmtpa to 13.04mmtpa.