Is JSW Cement IPO a Risky Bet? Should You Apply or Skip?

JSW Cement, a part of the JSW Group, is set to launch its much awaited JSW Cement IPO. The company aims to raise Rs.1,600 crore through fresh equity. It will also raise Rs.2,000 crore through an offer for sale. The Mutual Funds will support a new Rajasthan unit and reduce debt. Post-IPO, promoter stake will decrease.

On a pre-IPO basis, the enterprise value of JSW Cement IPO works out to be 26.2 times of Ebitda compared with 16.8-28.4 times for peers.

ET Intelligence Group: JSW Cement, the cement manufacturing arm of the JSW group, plans to raise Rs.1,600 crore through a fresh equity issue to finance its new Rajasthan unit and repay debt. It will also raise Rs.2,000 crore through an offer for sale. The promoter stake will fall to 72.3% after the IPO from 78.6%.

The company has higher raw material cost/ tonne and lower Ebitda/tonne than peers. Green power consumption is also lower at 21.5% compared with 28-56% for peers. It plans to increase it to 63% in coming years. Given these factors, investors may wait and see company's financial performance after listing.

Also Read: RBI Monetary Policy 2025: RBI Repo Rate Remains at 5.5%

The company has seven plants in India and one clinker unit in the UAE, operated by JSW Cement FZC (a joint venture with Aquarius Global Fund PCC).

Financials of JSW Cement IPO

Revenue from operations and Ebitda declined 3.6% and 21.4% year-on-year to Rs.5,813.1 crore and Rs.864.2 crore in FY25. It reported net loss of Rs.163.8 crore in FY25 compared with net profit of Rs.62 crore in FY24. The major reasons for incurring net loss are: fair value loss arising from financial instruments (CCPS); subdued performance of subsidiaries and employee stock option plan (ESOP) adjustment.

Also Read: Jio BlackRock AMC Opens NFO for 1st-Ever Index Funds Series

Also, its joint venture, JSW One Platforms has incurred loss. JSW Cement IPO expects the platform to break even in the last quarter of FY26. Operating Ebitda margin dropped to 14.9% in FY25 from 18.2% in FY24. Net debt was at Rs.4,203.8 crore, out of which Rs.520 crore will be paid off from JSW Cement IPO proceeds. Finance cost as a percentage of total expenses was 7.7% in FY25 compared with 7.5% in FY24.

Valuation on JSW Cement IPO

Price-earnings (P/E) multiple will not help since the company has recorded loss in FY25. The price-to-sales multiple works out to 3.4 vs 2.7-5.7 for peers. On a pre-IPO basis, the enterprise value of JSW Cement IPO works out to be 26.2 times of Ebitda compared with 16.8-28.4 times for peers.