According to the people cited above, the talks with lenders are at a very early stage with no certainty of a transaction.
“The talks are preliminary at this juncture but the thought process behind the move is a potential delisting of the company in future,” said one of the persons cited above. “It is equally possible that promoters may decide against increasing their stake from the current level or explore any delisting offer.”
JSPL, part of the OP Jindal group, is one of India’s largest steel producers. According to the latest data, the promoter Jindal family currently owns a 61.2% stake and has increased holdings by 0.8 percentage point since the June quarter last year. “We do not comment on market rumours or speculation,” said a spokesperson. “The company reserves its legal rights and would be compelled to protect the interests of its stakeholders.”
Benefitting from an upswing in steel prices in recent years, JSPL reported ebitda (earnings before interest, tax, depreciation and amortisation) of ₹15,513 crore in FY22. In FY23, ebitda moderated to ₹9,935 crore. Analysts at ICICI Direct expect the company to report an ebitda of ₹11,687 crore in FY24.
Stock up 82% in a Year
The company had cash and bank balances to the tune of ₹5,700 crore as of March 31 this year.
Investors have cheered the company’s recovery and focus on expansion in India, with its stock gaining around 82% in the past one-year period, outperforming peers Tata Steel and JSW Steel, part of brother Sajjan Jindal’s JSW Group.
JSPL closed at ₹641.60 on the BSE on Friday. While JSPL has been in the limelight, the privately held businesses of Naveen Jindal, a former Congress parliamentarian from Haryana, have been expanding with an estimated ebitda of around ₹6,000 crore in FY23.
In 2020, when JSPL put its Oman-based subsidiary Jindal Shadeed Iron and Steel LLC on the block, Vulcan Steel, a company linked to Naveen Jindal, bought the steel plant at an enterprise value of $1 billion. Close on the heels of this acquisition came the sale of Jindal Power by JSPL to Worldone Private Ltd, another company linked to Naveen Jindal, for ₹7,401 crore. Jindal Power has ₹3,400 mw of installed thermal power capacity in Raigad.
The power company is now expanding rapidly with nearly 2,000 mw of thermal and 5,400 mw of hydro power projects planned in India and 650 mw of thermal power assets planned in Africa. In 2021, Vulcan Minerals acquired the Moatize coal mine in Mozambique and a connected railway corridor for $270 million from Brazilian miner Vale. The asset now supplies coal to listed JSPL.
Apart from these, Jindal also plans to set up large renewable energy assets through privately-owned entities, said people in the know. In March, Jindal said his business group will be signing an agreement with the Andhra government for investing in renewable energy.