JSW Cement shares demonstrated resilience on their second day of trading, climbing 4% to reach Rs 152.00 on Monday. This uptick brought the stock price back above its initial public offering (IPO) price of Rs 147.00, following a disappointing debut.

IPO Performance and Market Reaction

The cement manufacturer's stock had a rocky start, opening at Rs 153.00 but closing down over 5% at Rs 145.05. However, the Rs 3,600.00 crore IPO had garnered significant interest during its subscription period, being oversubscribed 7.77 times. Qualified institutional buyers showed particularly strong demand, with their portion oversubscribed by 15.8 times.

Analyst Concerns

Despite the initial enthusiasm, analysts have expressed reservations about JSW Cement's valuation and profitability. These concerns likely contributed to the stock's weak debut and continue to influence market sentiment.

Financial Overview

JSW Cement reported revenue of Rs 5,813.00 crore, but saw its operating margins decline from 15.37% to 12.00%. The company's debt position has also raised some eyebrows:

The increase in debt and the high debt-to-EBITDA ratio of 8.63x highlight the company's leveraged position.

Expansion Plans

Despite these financial challenges, JSW Cement has ambitious growth plans:

• Current grinding capacity: 20.6 MTPA
• Near-term expansion target: 41.85 MTPA
• Mid-2030s capacity goal: 60 MTPA

Use of IPO Proceeds

The company intends to utilize the funds raised from the IPO for two primary purposes:

1. Financing a new cement unit in Rajasthan
2. Repaying existing borrowings

As JSW Cement navigates its early days as a publicly traded company, investors will be closely watching its ability to execute its expansion plans while managing its debt and improving profitability.

JSW Cement, a prominent player in the Indian cement industry, witnessed a rocky start on its first day of trading, with shares declining from their opening prices. The stock's performance on its debut day has caught the attention of investors and market analysts alike.

Initial Listing and Price Movement

JSW Cement shares opened at a range of Rs 153.00-153.50, marking a 4.08-4.42% premium over the initial public offering (IPO) price of Rs 147.00. This opening surpassed the grey market expectations, which had pegged the listing price at around Rs 151.00. However, the initial optimism was short-lived as the stock price retreated during the trading session.

By the end of the day, JSW Cement shares had fallen to Rs 145.05, representing a decline of 5.20% from the opening price. This downturn placed the stock below its IPO price, disappointing investors who had hoped for stronger gains on the first day of trading.

IPO Performance and Subscription Details

Despite the lukewarm market debut, it's worth noting that the JSW Cement IPO had garnered significant interest during its subscription period. The Rs 3,600.00 crore offering was oversubscribed 7.77 times, indicating strong demand from various investor categories. The breakdown of subscription rates reveals:

The IPO structure consisted of a fresh issue of shares worth Rs 1,600.00 crore and an offer for sale by promoters amounting to Rs 2,000.00 crore.

Analyst Perspectives and Concerns

Market analysts have pointed out several factors that may have contributed to the stock's underwhelming performance on its debut:

1. Valuation Concerns: JSW Cement's valuation at 32 times EV/EBITDA is significantly higher than the industry average of 23 times, raising questions about its pricing.

2. Recent Financial Performance: The company reported losses in the most recent fiscal year, despite showing profitability in the two preceding years.

However, some analysts maintain a positive long-term outlook for JSW Cement, citing:

• Strong growth potential in the cement sector
• The company's ambitious expansion plans, including doubling its grinding capacity

Company Overview

JSW Cement currently operates seven plants with a combined annual grinding capacity of 20.60 million tonnes. The company's recent financial performance has been mixed, with profitability in two fiscal years followed by losses in the most recent year.

Investor Advice

Given the company's growth prospects and expansion plans, some analysts recommend holding JSW Cement shares for the long term, despite the initial market reaction. However, investors are advised to carefully consider the high valuations and recent financial performance before making investment decisions.

As the cement industry continues to evolve, JSW Cement's performance in the coming quarters will be closely watched by investors and industry observers alike.