JSW Cement’s IPO, valued at 36 billion rupees ($413 million), achieved full subscription by the third day of bidding on Monday, as investors placed their confidence in the Indian company’s long-term growth potential, supported by the government’s initiatives in infrastructure and housing.
In India, the second-largest global producer of cement, manufacturers are optimistic about the increasing government expenditure on infrastructure and a positive housing market, which are expected to enhance demand and stimulate greater deal-making activity in recent years. According to a note from Moody’s Ratings in May, cement demand is projected to rise by 6%-7% annually until 2030.
Analysts also anticipate a recovery in prices as they rebound from the multi-year lows experienced in the previous fiscal year. As of 1:00 p.m. local time, total bids reached 1.31 times the number of shares available, as reported by exchange data. Both institutional and retail investors successfully matched the share portions allocated to them. The shares of the cement company, which is targeting a valuation of approximately $2.3 billion, are scheduled to be listed on August 14 on both the National Stock Exchange and the Bombay Stock Exchange.
JSW Cement operates seven plants across the southern, eastern, and western regions of India and is considered a smaller entity in an industry largely dominated by UltraTech, backed by the Aditya Birla Group, and Ambuja, supported by Gautam Adani. Based in Mumbai, the firm is part of the diversified JSW conglomerate, which spans sectors from automobiles to steel.
The company filed for its offering last August, intending to use the proceeds from the new issue to finance a factory in the limestone-rich state of Rajasthan. This was approved by India’s market regulator in January.
According to brokerage Anand Rathi Research in a July note, JSW Cement possesses a competitive advantage due to its ‘access’ to group companies in the steel, energy, and marine infrastructure sectors, which facilitates the sourcing of essential raw materials like blast furnace slag and power under ‘favorable and competitive terms.’
