JSW Cement: Is JSW Cement’s IPO a risky bet amid rising costs and declining profits?

ET Intelligence Group: JSW Cement, the cement manufacturing arm of the JSW group, plans to raise ₹1,600 crore through a fresh equity issue to finance its new Rajasthan unit and repay debt. It will also raise ₹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.

BusinessIncorporated in 2006, JSW Cement has installed grinding capacity of 20.6 million metric tonnes per annum (MMTPA) in the southern, western and eastern regions of India and clinker capacity of 6.4 MMTPA as of March 2025. With a market share of 84% in terms of ground granulated blast furnace slag (GGBS) sales in FY25, the firm is India’s biggest producer of GGBS, an eco-friendly product made entirely from blast furnace slag. 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).

FinancialsRevenue from operations and Ebitda declined 3.6% and 21.4% year-on-year to ₹5,813.1 crore and ₹864.2 crore in FY25. It reported net loss of ₹163.8 crore in FY25 compared with net profit of ₹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, its joint venture, JSW One Platforms has incurred loss. JSW Cement 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 ₹4,203.8 crore, out of which ₹520 crore will be paid off from IPO proceeds. Finance cost as a percentage of total expenses was 7.7% in FY25 compared with 7.5% in FY24.ValuationPrice-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 works out to be 26.2 times of Ebitda compared with 16.8-28.4 times for peers.