On Monday, JSW Infrastructure's initial public offering opened, with several local brokerage firms recommending subscription. Investors should be careful for the company's dependence on captive business and government licences and agreements, the analysts said.
The company Sajjan Jindal is the third listing by the JSW Group and it comes after a 13-year gap. Analysts say JSW Infrastructure's strong parentage is a positive as they flagged its dependence on group businesses.
A key concern about the company is related party transactions with JSW Group companies, said Nirmal Bang, a stock broking firm. The related party transactions include land parcels owned by them and leased to the company for its port and terminals, said Nirmal Bang analysts.
As of June 30, 2023, the company's installed cargo handling capacity was 158.43 million tons per annum, which compares to roughly a quarter of Adani Ports and SEZ's capacity of 602 MT, its only listed, comparable peers, and the largest commerical port operator.
JSW Infrastructure is the second largest commercial port operator in India. Adani Ports and SEZ are its only listed peers, comparable to Adani Ports.
Motilal Oswal said that the company's reliance on concession and licence agreements by government and quasi-governmental organizations could lead to discontinuation and affect its operations.
In FY23, the company reported that profit after tax was 750 crore and total income was Rs 3373 crore.
The IPO is a fresh issue of equity shares worth Rs.2,800 crore at a price band of 113 to Rs.119 per equity share and closes on Wednesday. The company has allotted shares worth 1,260 crore to anchor investors last week. analysts at Stoxbox said the firm had received more than 200,000 calls from investors for the last year.