JSW Infra’s strong growth narrative outweighs equity dilution worries even as timely execution risks persist

Subscribe to enjoy similar stories. JSW Infrastructure Ltd’s management has approved equity fund raising of up to 250 million shares on Friday, which is almost equal to its initial public offering (IPO) size in terms of number of shares. A qualified institutional placement (QIP) is likely to be the preferred mode for raising funds.

The fund-raising plan is aimed at meeting twin objectives: complying with the Securities and Exchange Board of India (Sebi) norms of minimum public shareholding and funding the aggressive capital expenditure plans. JSW stock was listed on 3 October 2023; the promoters must reduce their stake to 75% or below by 2 October 2026, i.e., within three years of the date of listing. The current promoter stake is 83.6%, which means the equity base would need to be diluted by 12% to bring it to 75%.

Thus, the management has kept the issue size of fresh equity shares at 12% of the current number of equity shares, at 2.1 billion, or about 250 million. If the fresh shares are issued at ₹250 per share (near the current market price), JSW should be able to garner ₹6,250 crore, more than twice the ₹2,800 crore it raised in the IPO. Given that the combined capital expenditure for FY27 and FY28 is estimated at ₹16,500 crore ( ₹13,000 crore for ports and ₹3,500 crore for logistics), funds to be raised through a QIP would be useful.

JSW’s shares have now risen over 100% from their IPO issue price of ₹119. But can the equity dilution spoil the party from here on? The answer depends on whether JSW can get its expansion right. While FY26 and FY27 are expected to witness cargo volume growth of 5% and 9%, respectively, to reach 134 million tonnes per annum (mtpa) by FY27, JSW hopes FY28 will be the year of robust