Afcons Infrastructure Limited will launch its Initial Public Offering (IPO), consisting of a fresh issue and an offer for sale (OFS). The fresh issue is expected to raise ₹1,2500 crore, and the OFS aims to raise ₹4,180 crore, totaling ₹5,430 crore. The IPO aims to use funds for company capital expenditure, working capital requirements, and debt repayment. It will open for bidding on October 25, 2024, and close on October 29, 2024. Afcons Infrastructure shares are likely to be listed on November 4, 2024, in NSE and BSE shortly.
About Afcons Infrastructure GMP
The share price of Afcons Infrastructure Limited in the grey market was trading at a 21.60% premium as of October 21st, 2024. The shares in Grey Market traded at Rs. 563. This gives it a premium of Rs. 100 per share over the cap price of Rs. 463.
About Afcons Infrastructure (Overview)
Afcons Infrastructure Limited was founded in 1959 and is a leading infrastructure engineering and construction company under the Shapoorji Pallonji Group. The company specializes in engineering, procurement, and construction (EPC) services across multiple sectors. As of September 30, 2023, Afcons has completed 76 projects in 15 countries with a total executed contract value of ₹522.20 billion.
Afcons currently has 67 active projects across 13 countries, boasting an order book worth ₹348.88 billion. The company operates in five key verticals: marine and industrial, surface transport, urban infrastructure, hydro and underground, and oil and gas projects. Its international presence spans Asia, Africa, and the Middle East, reflecting its expertise in large-scale global projects.
Afcons Infrastructure Promoter
Afcons Infrastructure is promoted by Goswami Infratech Private Limited, Shapoorji Pallonji and Company Private Limited, Floreat Investments Private Limited, and notable individuals like Shapoorji Pallonji Mistry, Firoz Cyrus Mistry, and Zahan Cyrus Mistry. These promoters play a key role in the company’s strategic direction and operational growth.
Afcons Infrastructure Selling Shareholders
The offer for sale includes equity shares held by Goswami Infratech Private Limited, the promoter. They aim to offer shares of 9.3 crore amounting to ₹4,180 crore in the IPO. This sale is part of the company’s plan to provide liquidity to existing shareholders.
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Afcons Infrastructure Lead Managers
The IPO will be managed by a consortium of lead managers, including ICICI Securities Limited, DAM Capital Advisors Limited, Jefferies India Private Limited, Nomura Financial Advisory and Securities, Nuvama Wealth Management Limited, and SBI Capital Markets
Limited. Link Intime India Private Limited is the registrar, overseeing the application and allotment process.
Afcons Infrastructure IPO Objectives:
The primary objectives of the Afcons Infrastructure IPO are:
● Raise Rs. 80 crore for capital expenditure towards the purchase of construction equipment.
● Raise Rs. 320 crore for funding long-term working capital requirements ● Repay a portion of existing outstanding borrowings worth Rs. 600 crore.
● The remaining funds will be used for general corporate purposes.
Afcons Infrastructure Financials:
Afcons Infrastructure’s revenue has increased from Rs 12,637.38 crore in FY23 to Rs. 13,674.5 crore in FY24, which has grown by 8.21%. The net profit has increased by 9.46% from Rs. 410.86 crore in FY23 to Rs. 449.74 crore in FY24.
Afcons Infrastructure Limited maintained a huge order book of Rs. 31,747.43 crore in the financial year 2024. It includes 75.61% of domestic orders and 24.39% of overseas orders as of June 30, 2024.
The company’s EBITDA margin has improved from 10.70% in FY23 to 11.60% in FY24. The PAT margin also increased from 3.20% to 3.30% in FY24. The Company ROE and ROCE have to be 13.28% and 20.18%, respectively, in FY24. The debt-to-equity ratio of the company has increased from 0.49x in FY23 to 0.68x in FY24.
Afcons Infrastructure vs. Peers
Afcons Infrastructure competes with established peers like Larsen & Toubro, KEC International Limited, Dilip Buildcon Limited, and Kalpataru Project International Limited. Afcons Infrastructure Limited’s revenue is higher than Dilip Buildcon Limited but lower than Larsen & Toubro, KEC International Limited, and Kalpataru Project International Limited.
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Strengths and Weakness of Afcons Infrastructure
Afcons Infrastructure’s strengths lie in its diverse project portfolio, ensuring stability and growth across sectors. The experienced management team brings decades of expertise in infrastructure development. Afcons consistently secures large government contracts, providing long-term revenue. Its growing international presence enhances its reputation in global markets. The company also adopts innovative engineering solutions to improve project efficiency and execution.
However, Afcons faces challenges such as high debt levels, which may limit flexibility in capital-intensive projects. It competes with established players, affecting profit margins. Heavy reliance on government contracts brings risks from potential policy changes. Delays in project execution can result in financial penalties and increased costs. Additionally, Afcons has limited diversification in newer infrastructure segments, such as renewable energy.
Finally, Afcons Infrastructure’s IPO presents an opportunity for investors seeking exposure to India’s growing infrastructure sector. With a strong promoter group, a proven business model, and solid financials, Afcons is positioned to capitalize on future opportunities. However, investors should also consider risks such as competition, debt, and dependency on government contracts.
Written by: Nikhil Naik
Disclaimer
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