Afcons Infrastructure IPO of Rs 5,430 Cr Gets \"Subscribe – Long Term\" Rating From Anand Rathi

Afcons Infrastructure IPO of Rs 5,430 Cr Gets \"Subscribe – Long Term\" Rating From Anand Rathi

Business oi-Vipul Das

With a history spanning more than 60 years, Afcons Infrastructure Limited is the main infrastructure, engineering, and building firm of the Shapoorji Pallonji group, which is also the group’s top engineering and construction firm. They have a proven track record of successfully completing a large number of distinctive engineering, procurement, and construction (“EPC”) projects domestically as well as internationally.

Afcons Infrastructure IPO Details

The Afcons Infrastructure IPO is a Rs 5,430.00 crore book-built offering. The public offering consists of a 9.03 crore share offer for sale (OFS) segment, totalling Rs 4,180.00 crores, and a fresh issue of 2.7 crore shares, totalling Rs 1,250.00 crores. The Afcons Infrastructure IPO’s book-running lead managers are ICICI Securities Limited, Dam Capital Advisors Ltd (formerly Idfc Securities Ltd), Jefferies India Private Limited, Nomura Financial Advisory And Securities (India) Pvt Ltd, Nuvama Wealth Management Limited, and SBI Capital Markets Limited while the issue’s registrar is Link Intime India Private Ltd.

The subscription period for the Afcons Infrastructure IPO began on October 25, 2024, and it will end on October 29, 2024. On Wednesday, October 30, 2024, the allocation of shares for the Afcons Infrastructure IPO is anticipated to be finalised. The proposed listing date for the Afcons Infrastructure IPO is set for Monday, November 4, 2024, and it will be listed on the BSE and NSE platforms. The price band for Afcons Infrastructure’s IPO is Rs 440 to Rs 463 per share. Retail investors must deposit a minimum of Rs 14,816 since the minimum lot size for an application is 32 shares.

Afcons Infrastructure IPO GMP

According to the latest GMP, the Afcons Infrastructure IPO saw a muted listing premium following its subscription opening. Afcons Infrastructure’s latest GMP was Rs 15, and it was last updated at 06:03 AM on October 26, 2024, despite having a robust, diversified business strategy, a stable order book, and consistent financial success in the services industry. Afcons Infrastructure IPO’s projected listing price is Rs 478 (upper price band + today’s GMP), considering the upper price band of Rs 463.00. Accordingly, the current GMP indicates that the expected listing premium for the Afcons Infrastructure IPO is 3.24%.

Afcons Infrastructure IPO Review

“At the upper band company is valuing at 37.9x its FY24 earnings along with being valued at 46.3x if we annualize FY25 earnings. Following the issuance of equity shares, the company’s market capitalization stands at ₹1,70,261.8 million, with a market cap-to-sales ratio of 1.34 based on its FY24 earnings. We believe that the issue is fully priced and recommend “Subscribe – Long Term” rating to the IPO,” said the broking firm Anand Rathi.

“Afcons Infra is a leading infrastructure construction company known for executing large and complex projects across India and internationally. They specialize in large, complex, and high-value projects, with a proven record in efficient project management, execution, and timely delivery across various sectors and locations. Most of their projects are completed on or ahead of schedule, and they have successfully undertaken numerous complex, challenging, and unique infrastructure projects, including several ‘first of its kind’ initiatives in India and globally. The company is dedicated to pursuing high-value, complex projects that align with its project selection criteria and risk management framework. The company understands the importance of geographical diversification and aims to maximize opportunities in current markets while expanding its presence internationally, leveraging growth trends in both India and emerging markets worldwide. Afcons acknowledges the inherent risks in the infrastructure sector, both in India and globally, and employs a structured risk management system to identify, assess, and monitor potential risks in their operations,” Anand Rathi further added.

“The company has a strong, diversified business model with a solid order book and consistent financial performance in the infrastructure sector. Key strengths include strategic equipment investments, but challenges such as low PAT margins and reliance on government capex exist. While management focuses on long-term asset utilization, backed by Shapoorji Pallonji, investors should be aware of risks related to capex dependency and profit margins. We recommend SUBSCRIBE to this issue for long-term gains,” said the research analysts of Canara Bank Securities.

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