Afcons Infrastructure IPO: Opens October 25, Check Details

Afcons Infrastructure IPO

Afcons Infrastructure IPO: Key Insights and Expert Opinions Ahead of Launch

The IPO of Afcons Infrastructure, a prominent player in the infrastructure sector and a part of the Shapoorji Pallonji Group, is generating significant interest as it prepares to open for public subscription on October 25, 2024.

This public offering aims to raise a substantial ₹5,430 crore, which will be crucial for financing various projects and operational expansions.

Investors are eager to understand the details, prospects, and expert opinions regarding this IPO, especially with the listing date set for November 4, 2024.

Key IPO Details

• IPO Opening Date: October 25, 2024
• IPO Closing Date: October 29, 2024
• Anchor Investor Bidding: October 24, 2024
• Share Allotment Date: October 30, 2024
• Listing on BSE/NSE: November 4, 2024

The IPO consists of a fresh issue of shares worth ₹1,250 crore and an offer for sale of shares totaling ₹4,180 crore.

The price band for the shares is set between ₹440 and ₹463, with a minimum lot size of 32 shares.

Currently, market indications suggest that Afcons shares are trading in the gray market at a premium of ₹70, translating to a potential listing price of around ₹533—a noteworthy 15.12% increase over the upper price band.

Financial Performance

Afcons Infrastructure has demonstrated consistent growth over the years, evidenced by its financial performance.

For the fiscal year 2024 (FY24), the company reported revenues of ₹13,646.88 crore, marking a 6% increase from ₹12,844.09 crore in the previous year.

Additionally, the net profit rose by 9%, from ₹410.86 crore in FY23 to ₹449.76 crore in FY24.

The first quarter of FY25 also saw robust results, with revenue reaching ₹3,213.47 crore and net profit hitting ₹91.59 crore.

This upward trajectory in revenue and profits positions Afcons as a resilient player in the infrastructure space, making it an attractive proposition for potential investors.

Allocation of IPO Proceeds

The funds raised from the IPO are earmarked for several strategic initiatives:

• ₹80 crore will be allocated for the purchase of construction equipment, which is essential for enhancing operational efficiency.
• ₹320 crore is designated to support long-term working capital requirements, ensuring smooth project execution and management.
• ₹600 crore will be used to partially repay existing borrowings, improving the company’s balance sheet.
• The remainder will be allocated for general corporate purposes, which may include investment in new projects or initiatives that align with the company’s growth strategy.

Company Overview

Founded in 1959, Afcons Infrastructure has grown to become a key player in the infrastructure engineering and construction sector, with a diverse portfolio that includes transportation, marine, and industrial projects.

The company operates in various international markets, including Asia, Africa, and the Middle East, showcasing its global reach and capability to execute large-scale projects.

As of June 2024, Afcons was managing 65 projects across 12 countries, with a total order book valued at ₹31,747 crore.

This robust order book, which is 2.52 times the company’s sales, indicates a healthy pipeline of work that is likely to drive future revenue growth.

Expert Opinions

With the IPO drawing near, several experts have shared their insights regarding the investment potential of Afcons Infrastructure:

• SBI Securities notes that the company’s diverse project portfolio and solid financial performance make it a compelling investment opportunity. The strong order book is particularly promising, as it suggests sustained revenue streams in the coming years. The firm highlights Afcons’ execution capabilities, stating, “The total order book stood at ₹31,747 crore as of June 2024, and the company is well-positioned for future growth.”
• K R Choksey, a brokerage firm, has assigned a ‘Subscribe’ rating to the IPO. Their analysis emphasizes Afcons’ strategic position within the infrastructure sector, supported by extensive experience in complex engineering, procurement, and construction projects. The firm’s successful execution of 79 projects in 17 countries over the last decade underscores its operational strength. K R Choksey stated, “Given the company’s robust growth trajectory and financial metrics, we believe it presents a valuable opportunity for investors.”
• Axis Capital also views the IPO positively, highlighting Afcons’ involvement in high-profile projects such as the Chenab Bridge, the world’s tallest single-arch railway bridge, and the Atal Tunnel, the longest highway tunnel globally. The firm points out that these projects not only enhance Afcons’ portfolio but also establish its reputation as a leader in handling complex infrastructure tasks. Their note mentions, “The healthy order book, combined with successful project completions, positions Afcons for continued financial success.”

Market Sentiment and Gray Market Indicators

The gray market activity surrounding Afcons Infrastructure shares provides additional insights into investor sentiment.

As of now, shares are trading at a premium, suggesting a positive outlook among investors ahead of the official listing.

While gray market premiums can fluctuate, sustained interest may indicate confidence in the company’s growth prospects and overall market performance post-IPO.

Final Remarks

In summary, the Afcons Infrastructure IPO presents a compelling opportunity for investors looking to gain exposure to the infrastructure sector.

With a strong order book, solid financial performance, and backing from expert analyses, the company appears well-positioned for growth.

As the IPO date approaches, potential investors should carefully consider the insights provided by market experts and evaluate how Afcons aligns with their investment strategies.

With the infrastructure sector poised for growth in the coming years, Afcons Infrastructure could serve as a valuable addition to investment portfolios, especially for those looking to tap into the expanding opportunities within this essential industry.