JSW Infrastructure IPO - Investment Rationale, Issue Details, Strengths, Financials, Risks: Anand Rathi

"BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Anand Rathi's IPO Report.JSW Infrastructure Ltd. launched its initial public offering today and the issue closes on September 27. The company has fixed a price band in the range of Rs 113-119 per share. The minimum order quantity is 126.The port-related infrastructure company plans to raise up to Rs 2,800 crore via a fresh issue. .Objects of the IssueFull or part repayment and/or prepayment of certain outstanding secured borrowings availed by the company.Financing capital expenditure requirements through investment in the wholly owned subsidiary.General corporate purposes..Strengths:Fastest growing port-related infrastructure company and second largest commercial port operator in India.Strategically located assets at close proximity to JSW Group Customers (related parties) and industrial clusters supported by a multi-modal evacuation infrastructure.Predictable revenues driven by long-term concessions, committed long-term cargo and stable tariffs.Diversified operations in terms of cargo profile, geography and assets.Demonstrated project development, execution and operational capabilities..Valuation JSW Infrastructure is fastest growing port-related infrastructure and second largest commercial port operator in India with strategically located assets at close proximity to JSW Group Customers (related parties) and industrial clusters supported by a multi-modal evacuation infrastructure and Predictable revenues driven by long-term concessions, committed long-term cargo and stable tariffs along with diversified operations in terms of cargo profile, geography and assets and also have benefit from strong corporate lineage of the JSW Group and a qualified and experienced management team. At the upper price band company is valuing at price/earning of 27 times, enterprise value/Ebitda 17 times with a market cap of Rs 2,49,900 million post issue of equity shares and return on net worth of 18.80%. We believe that valuations of the company is fairly priced and recommend a 'Subscribe-Long Term' rating to the IPO..Key Risk: They rely on concession and license agreements from government and quasi-governmental organisations to operate and grow their business. They have several obligations under these agreements and a breach of the terms could lead to termination, which could materially adversely affect their business, results of operations, financial condition and cash flows. A substantial portion of the volume of cargo handled by them is dependent on a few types of cargo and a significant reduction in, or the elimination of such cargo could adversely affect their profitability. The environmental clearance for capacity enhancement issued to their subsidiary, South West Port Ltd. has been challenged before the National Green Tribunal and is subject to the outcome of certain other litigations. Any adverse outcome in these litigations may have an adverse effect on their business, financial condition, results of operations and cash flows.They have entered into and may continue to enter into a substantial amount of related party transactions with entities in the JSW Group.  They operate in a capital-intensive industry and their current and future expansion plans may require significant capital that they may be unable to raise. Furthermore, their investments in developing additional services and facilities for their port business may not be successful.Company have substantial indebtedness which requires significant cash flows to service, and limits their ability to operate freely. Any breach of terms under their financing arrangements or their inability to meet their obligations, including financial and other covenants under their debt financing arrangements could adversely affect their business and financial condition. They do not own the JSW trademark, and their ability to use the trademark, name and logo may be impaired. Any reputational damage to this trademark or the JSW Group, name or logo could have an adverse effect on their financial condition, cash flows and results of operations. They are yet to place orders for certain equipment and certain civil works for expansion of projects proposed to be funded through this Issue. In the event of any delay in placing the orders, or in the event the vendors are not able to provide the equipment or services in a timely manner, or at all, it may result in time and cost over-runs and their business, prospects and results of operations may be adversely affected.Their financial condition and business prospects could be materially and adversely affected if they do not complete their greenfield and brownfield expansion projects as planned or if they experience delays or cost overruns.Their business and operations are subject to extensive environmental and other related regulations and policies and any onerous amendments to such regulations and policies may involve incurring added compliance costs..Click on the attachment to read the full IPO report:.JSW Infrastructure IPO: All You Need To Know.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

JSW Infrastructure IPO - Investment Rationale, Issue Details, Strengths, Financials, Risks: Anand Rathi

The Rs 2,800 crore IPO opened today, the port-related infra company has fixed a price band in the range of Rs 113-119 Apiece.

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JSW Infrastructure IPO - Investment Rationale, Issue Details, Strengths, Financials, Risks: Anand Rathi

The Rs 2,800 crore IPO opened today, the port-related infra company has fixed a price band in the range of Rs 113-119 Apiece.

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