Afcons Infra fixes IPO price at Rs 440-Rs 463 per share, issue to open on October 25

The IPO-Afcons Infrastructure Ltd, a Shapoorji Pallonji group firm, has announced a price band of Rs 440-463 per share for its issue worth Rs 5,430 crore. The issue, which is set to open on October 25, 2024, will continue till October 29, 2024. Notably, the Afcons IPO will be a mix of a fresh issue worth Rs 1,250 crore and an OFS (offer for sale) worth Rs 4,180 crore.

Investors can bid for a minimum of 1 lot, which consists of 32 shares, meaning investors will be required to invest at least Rs 14,816. Last week, in a pre-IPO placement, Afcons Infrastructure raised Rs 2,967 crore from the company’s management and various institutional investors, like GIC Singapore, Enam Holdings (Akash Bhanshali), Synergy Capital, 360 One, White Oak, and more.

Afcons will reportedly use around Rs 80 crore from IPO proceeds to fund capital expenditure and purchase construction equipment, another Rs 320 crore to support long-term working capital requirements, and Rs 600 crore for prepaying portions of certain outstanding loans.

The company operates across five major infrastructure business verticals, namely marine and industrial, surface transport, urban infrastructure, hydro and underground, as well as oil and gas. As of September 30, 2024, the company boasted of an order book worth over Rs 40,000 crore.

Stock analyst Dilip Dawda recommends subscribing to the IPO. The company is the flagship infrastructure, engineering, and construction company of the Shapoorji Pallonji Group. It is a well-diversified infrastructure company, having an average 30% export revenue. The company posted steady growth in its top and bottom lines for the reported periods. Based on FY25 annualized earnings and FY24 earnings, the issue appears fully priced. Investors may park funds for the medium to long term in this dividend-paying company," he continues.

As of October 21, 2024, the company's GMP (grey market premium) was trading at Rs 88, taking its estimated listing price to Rs 551. This means an expected listing gain of 19.01% per share.

The company has reported a steady rise in its revenue from operations over the past 2 years, from Rs 1,10,189.66 million in FY22 to Rs 1,26,373.82 million in FY23 and Rs 1,32,674.95 for FY24. As of June 30th, 2024, the company's operational income stood at Rs 31,543.60 million.

Correspondingly, there has also been a rise in its PAT (profit after taxes), from Rs 3,576.05 million in FY22 to Rs 4,497.38 million in FY24. The company's PAT was Rs915.86 as of June 30th, 2024.

However, it must be noted that Afcons relies heavily on projects they contract through the government. As of June 30, 2024, projects awarded by the central or state government and government-owned enterprises made up around 69.80% of the Afcons order book. Multilateral projects, i.e., projects funded by the Indian government in other countries, constituted another 20.07%, while private projects contributed around 10.13% to its order book.

Also, the company depends heavily on its top 10 customers, with the total order book value attributable to them as of June 30, 2024, standing at Rs 2,03,379.45 million, or around 64.06%.