IPO Size Reduction for JSW Cement Before Launch on August 7: To Subscribe or Not? 5 Crucial Points Investors Ought to Consider

JSW Cement's much-anticipated Initial Public Offering (IPO) is set to launch on August 7, with a total size of Rs 3,600 crore. The allotment of shares is expected to be finalized by August 12, and the listing is scheduled for August 14 on both the BSE and NSE.

The IPO Composition

The IPO will consist of a fresh issue of Rs 1,600 crore and an offer for sale (OFS) of Rs 2,000 crore by existing investor-shareholders. Heavyweight private equity investors involved in JSW Cement's IPO include Apollo Global and Synergy Metals Investments Holding.

The Use of Funds

A major portion of the fresh issue, Rs 800 crore, will be used to build a new integrated cement plant in Nagaur, Rajasthan. Another Rs 520 crore from the fresh issue will be used for debt repayment, and the remaining funds will support general corporate expenses.

Key Risks and Challenges

While backed by the JSW Group brand and a focus on green cement, JSW Cement's IPO is not without its risks. The key risks associated with the IPO include aggressive capacity expansion, high debt, and lack of profitability; persistent suboptimal plant utilization; dependence on related-party raw material supply and continuous power; regulatory uncertainty; and financial losses with declining margins.

Aggressive Capacity Expansion and Geographical Concentration

JSW Cement is rapidly expanding its capacity, including a new integrated plant in Nagaur, Rajasthan. Such expansions carry project execution risks and could exacerbate underutilization issues, especially in regions like South India where demand is muted.

High Debt and Negative Profitability

The company had a net debt of ₹4,203.8 crore as of FY25, with only ₹520 crore intended to be repaid from IPO proceeds. It reported a net loss of ₹163.8 crore in FY25 compared to net profits in previous years, with EBITDA margins dropping from 18.2% to 14.9%. The Debt to Equity ratio increased to 2.62, signaling high leverage.

Suboptimal Plant Utilization

Average plant utilization stood at only 62.9% in FY25, indicating underutilization risks heightened by shutdowns, regional demand volatility, and reliance on clinker procurement during expansions that may impact operational efficiency and profitability.

Over 90% of key raw material (blast furnace slag) is sourced from JSW Steel and its subsidiaries. Any disruption in this supply chain or interruptions in power and fuel availability could severely affect production and financial performance.

Regulatory Risks

The promoter group has received SEBI show cause notices related to alleged violations in group restructuring. Pending regulatory proceedings could affect the company’s reputation and future capital market access.

Uncertainty Around Asset Transfers

The proposed transfer of the Sambalpur plant to an associate (Shiva Cement) is subject to regulatory approvals and legal complexities due to ongoing liquidation processes of related entities, adding transaction uncertainty.

The Company's Strategy and Future Plans

JSW Cement operates seven plants with a grinding capacity of 20.60 MMTPA and a clinker capacity of 6.44 MMTPA as of March 2025. The company plans to double its grinding capacity to 41.85 MMTPA and clinker capacity to 13.04 MMTPA through greenfield and brownfield projects.

Competition in the Indian Cement Market

JSW Cement faces stiff competition in the Indian cement market from key players such as JK Cement, UltraTech Cement, Ambuja Cements, Shree Cement, Dalmia Bharat, and JSW Energy.

Industry Support and Recommendations

The IPO is backed by big names and key players in the industry. Motilal Oswal has recommended a 'buy' on JSW Cement's IPO with a potential upside of as much as 34%.

Registrar to the Issue

KFin Technologies is the registrar to the issue of JSW Cement's IPO. The bidding process will be open from August 7 to August 11, with the anchor investor portion opening a day earlier on August 6.

[1] Source: Business Standard [2] Source: Mint [3] Source: Economic Times [4] Source: Livemint

Investors considering JSW Cement's IPO may want to consider the company's use of funds, with a significant portion earmarked for a new integrated cement plant, debt repayment, and general corporate expenses.
The mining and finance sectors may find interest in the offer for sale (OFS) by existing investor-shareholders, such as Apollo Global and Synergy Metals Investments Holding, in JSW Cement's IPO.
Potential investors should be aware of the key risks associated with JSW Cement's IPO, including aggressive capacity expansion, high debt, lack of profitability, suboptimal plant utilization, dependence on related-party raw material supply, regulatory uncertainty, financial losses with declining margins, and asset transfer complexities.
Those interested in the Indian cement market and Defi (Decentralized Finance) may want to pay attention to Motilal Oswal's recommendation of a 'buy' on JSW Cement's IPO, with a potential upside of as much as 34%.