JSW Cement DRHP Analysis - Leadership In The Fast-Growing GGBS Boosts Outlook: Systematix

Systematix Research Report

Offer Details

JSW Cement Ltd. plans to raise Rs 40 billion of which Rs 20 billion is via fresh issue and Rs 20 billion via offer for sale.

Investor selling shareholders-

1. iAP Asia Opportunistic Holdings (Rs 9.37 billion),

2. Synergy Metal Investments Holdings (Rs 9.37 billion) and

3. State Bank of India (Rs 1.25 billion).

Objects of the Offer

Net Proceeds of the Fresh Issue are proposed to be utilized for:

• Part financing the cost of establishing a new integrated cement unit at Nagaur, Rajasthan (Amount: Rs 8 billion),

• Prepayment/repayment, in-full/in-part, of all or a portion of certain outstanding borrowing (Amount: Rs 7.2 billion).

• and general corporate purposes.

Investment rationale

• Strong track record of capacity and volume growth.

• Well established leadership in the ground granulated blast furnace slag segment.

Strengthening operations:

• Strategically located plants.

• Cost Efficiency to drive margins further.

• Focus on expanding distribution network and brand building.

Key risks

• High Dependency on suppliers.

• Substantial rise in global fuel prices.

• Weak realisations could hamper growth.

JSW Cement is India’s largest manufacturer of ground granulated blast furnace slag with a market share of 82.7% as on FY24. It manufactures blended cement (42% of sales volume), OPC (16%) and GBBS (42%).

With an installed grinding capacity of 20.6 million tonnes per annum, the company’s 53% capacity is in the South, 25% in East while rest is in western region.

As of FY24, the company operated through seven plants in India, which comprises one integrated unit, one clinker unit and five grinding units. JSW Cement FZC also operates one clinker unit in the UAE that supplies clinker to the Dolvi grinding unit in western India and to third-party customers.

The company is currently undertaking greenfield and brownfield expansion plans across India, including in the north and central regions, to increase the Installed Grinding Capacity to 40.85 mtpa, and create a pan-India footprint.

Further, the company has limestone reserves of 1,098 metric million tonne.

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