JSW Infrastructure debuted on the bourses on October 3, and gave a decent listing gain of 32 per cent at ₹157.3 against the IPO price of ₹119. There seems to have been some selling pressure initially, but later buyers rushed in to pick up the stock, which hit upper circuit at ₹157.3.
At the issue price of ₹119, the EV/EBITDA of the company is 15.11 times and trailing PE at 28.6, which is reasonable compared to its listed peer Adani Ports. In our IPO research note dated September 26, 2023, we had recommended that investors subscribe to the issue.
However, at the current price of ₹157.3, the EV/EBITDA is 19.5 times, whereas the trailing PE of the company is 38 times. The trailing EV/EBITDA of Adani Ports is 17.48 times and trailing PE 33.67 times. Although the valuation may look relatively steep currently, given the robust financials, growth prospects and macro-economic tailwinds, the stock looks good and long-term investors may hold it.
Business
JSW Infrastructure was the second largest commercial port operator in India in terms of cargo handling capacity in fiscal 2023; it handled 92.83 million tonnes of cargo in this period. The port capacity was 158.4 million tonnes per annum (mtpa) as on June 30, 2023, and the capacity utilisation in the June 2023 quarter was 63 per cent.
JSW Infrastructure started as the cargo handling/ supply chain arm of JSW group and, of late, has started to serve non-JSW clients also. The share of third-party customers’ volume has increased to 37 per cent in the June quarter, from 24.81 per cent in FY21. Within the group companies, the JSW Steel business in the June quarter was 40 per cent of the total revenue, and the whole JSW group business accounted for 52.5 per cent of total revenue in this period.
The company provides maritime-related services, including, cargo handling, storage solutions, logistics services and other value-added services to its customers, and is evolving into an end-to-end logistics solutions provider.
Financials
JSW Infrastructure clocked a revenue CAGR of 41.77 per cent (FY21-23), whereas EBITDA grew at a CAGR of 42.06 per cent in the same period. Revenue in June quarter grew 6.63 per cent YoY to ₹918.23 crore and the EBITDA grew 16 per cent to ₹491 crore. The EBITDA margin in the June quarter was 53.52 per cent, which is 134 basis points lower YoY. The net profit margin in Q1FY24 was 35.09 per cent, which is 12.72 percentage points higher YoY. The company is debt-free post IPO.