JSW Infrastructure, India's second largest commercial port operator, plans to raise Rs 2,800 crore through an initial public offering (IPO). It is the first time in 13 years that the JSW group has opted for an IPO to raise capital. The money raised from the IPO will be used for the expansion of the Port of Jaigarh and the Mangalore terminal, as well as for the repayment of debts.

The promoter stake in the company fell from 96.4% to 85.6% after the IPO. JSW Infrastructure has shown rapid growth in cargo volume at port companies, focusing on its less capital-intensive and faster cash-flow-generating terminal business. Revenue stability is assured because the JSW group acts as an anchor client and the company enjoys a long concession period of more than 25 years, making it an attractive option for long-term investors.

JSW Infrastructure, headquartered in Mumbai, operates two non-major ports in Maharashtra, Jaigarh and Dharamtar, and seven terminals on both the west and east coasts of India. These ports are strategically located near JSW Steel and Energy plants, and the JSW Group contributes two-thirds of the company's revenue. Over the past three years, the share of third-party sales has steadily increased.

The company's cargo handling capacity increased 15% annually to 158 million tons per year (MTPA) between FY21 and FY23, with cargo volume growing 42% to 92.8 MTPA. In addition, it operates two port terminals in the UAE under operating and maintenance agreements with a capacity of 41 MTPA. The company is also developing a 52 MTPA capacity port in Jatadhar, Odisha, to support JSW Steel's new facility in the region.

In terms of revenue composition, the company generates nearly 32% of its revenues from iron ore treatment, 27% from thermal coal, 26% from coking coal and the rest from other cargo. Financially, JSW Infrastructure has reported impressive growth, with revenue increasing by 41% annually to Rs 3,194 crore between FY21 and FY23. Operating profit before depreciation and amortization (EBITDA) rose by 42% to Rs 1,798 crore during the same period, resulting in an EBITDA margin of 56%. Net profit also saw substantial annual growth of 62% to reach Rs 749 crore.

However, there are risks associated with the cargo handling activities, in particular the dependence on bulk cargo, which may be affected by fluctuations in commodity prices. Changes to concession and licensing agreements with the government can also affect the company's financial performance. In addition, regulatory fees account for 17% of the company's total revenue, adding to operational risk.