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Unlisted shares of Afcons Infrastructure Ltd are trading just Rs 38 higher in the grey market, signalling an 8.21 per cent listing gain from the public issue.
Afcons Infrastructure IPO.
Afcons Infrastructure IPO: The initial public offering (IPO) of Shapoorji Pallonji group firm Afcons Infrastructure Ltd, which was opened for public subscription on Friday, has so far received a muted response from investors. The Rs 5,430-crore IPO, which comprises fresh shares up to Rs 1,250 crore as well as an offer for sale (OFS) by the promoter up to Rs 4,180 crore, will conclude on October 29.
Till 4:55 pm on the second day of bidding on Monday, the IPO received a 0.51 times subscription garnering 3,13,95,744 shares against 6,13,13,722 shares on offer.
Its retail quota has been subscribed by 0.38 times so far, while its non-institutional investor (NII) category received a 0.75 times subscription. The QIB got a 0.88 times subscription.
The grey market activity is currently indicating a nearly 5% listing gain for investors, which is significantly lower than the 13% GMP recorded last week.
The proceeds from the OFS will be received by the selling shareholder and Afcons will not receive any proceeds from it.
Afcons Infrastructure IPO GMP Today
According to market observers, unlisted shares of Afcons Infrastructure Ltd are trading just Rs 38 higher in the grey market than its issue price. The Rs 38 grey market premium or GMP on Thursday means the grey market is expecting an 8.21 per cent listing gain from the public issue.
The current Rs 38 GMP is higher than the Rs 23 premium recorded in the morning.
The GMP is based on market sentiments and keeps changing. ‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
The price band of the Rs 5,430-crore IPO has been fixed at Rs 440 to Rs 463 per share for the public issue.
Afcons Infrastructure IPO Key Dates
The Afcons Infrastructure IPO will remain opened for public subscription between October 25 and October 29. The share allotment of the Afcons Infrastructure IPO will likely be finalised on October 30, while its shares will be listed on both BSE and NSE on November 4.
Afcons Infrastructure IPO: Analysts’ Recommendations
Afcons Infrastructure, in the last 11 years, has executed 79 projects across 17 countries with a total executed contract value of Rs 56,305 crore. Over the years, it has expanded its presence globally and in particular across Asia, Africa and the Middle East. The areas of operations cover five major infrastructure business verticals viz Marine and Industrial, Surface Transport, Urban Infrastructure, Hydro and Underground and Oil and Gas.
SBI Securities in its note said, “The company currently is executing 65 projects across 12 countries with an aggregate order book of Rs 31,747 cr as of June 2024. The order book to sales ratio stood at 2.52x thus offers decent revenue visibility in the near term.”
“The company, at lower and upper price band of Rs 440 and Rs 463, is valued at a P/E multiple of 36.1x/37.9x of its FY24 consolidated earnings respectively based on post issue capital. The company has demonstrated healthy financial performance as Revenue/EBITDA/PAT grew at 9.7%/20.8%/12.1% CAGR between FY22-FY24 to Rs 13,267.5 cr/ Rs 1,365.0 cr/ Rs 449.7 cr respectively,” SBI Securities said.
Brokerage firm K R Choksey recommended a ‘subscribe’ rating to the Afcons Infrastructure IPO.
Afcons Infrastructure is strategically positioned for sustained growth within the infrastructure sector, capitalising on its extensive experience in executing complex engineering, procurement, and construction projects.
With a strong order book of Rs 31,700 crore and a successful track record of completing 79 projects across 17 countries, it added.
“Given its solid financials and proactive growth strategies, the company is positioned for a favourable valuation . The IPO is pegged at a PE multiple of 36x. In light of Afcons Infrastructure’s robust growth potential, solid financial performance and strategic initiatives aimed at market expansion, we recommend a ‘SUBSCRIBE’ rating for the company,” K R Choksey said in a statement.
Axis Capital in its note said Afcons Infrastructure has worked on several complex projects some of which include Chenab Bridge — tallest single-arch railway bridge in the world, Atal Tunnel — the world’s longest highway tunnel located at 3,000 metres above sea level. Some of the company’s ongoing projects include Kolkata Metro- Design and construction of tunnels below the Hooghly River; Male to Thilafushi Link Project, Maldives and Construction of a 21 km long tunnel including India’s first undersea rail tunnel (7 km long) for the Mumbai – Ahmedabad high speed rail corridor.
“During the last 11 financial years and the 3-month period ended June 30, 2024, the company has successfully completed 79 projects across 17 countries with a total historic executed contract value of Rs 56,305 crore… The company’s healthy order book has contributed to strong financial performance. For the 3 months ended June 30, 2024, and 2023 and the FY 2024, 2023 and 2022, the company’s revenue from operations amounted to ₹3,154.36 Cr, ₹ 3,171.41 Cr, ₹13,267.49 Cr, ₹12,637.38 Cr, and ₹11,018.97 Cr, respectively, and the EBITDA amounted to ₹371.69 Cr, ₹314.06 Cr, ₹1,583.12 Cr, ₹1,373.79 Cr, and ₹1,068.59 Cr, respectively,” it added.
Afcons Infrastructure IPO Price and Lot Size
The price band of the Rs 5,430-crore IPO has been fixed at Rs 440 to Rs 463 per share for the public issue.
Investors can bid for 32 shares in one lot and in multiples thereof.
Afcons Infrastructure IPO: More Details
The Afcons Infrastructure IPO equity shares comprise a fresh issue of up to Rs 1,250 crore and the offer for sale (OFS) up to Rs 4,180 crore.
Goswami Infratech Pvt Ltd, a promoter group company, is selling shares through OFS.
Of the total proceeds from the fresh issue of shares, Afcons Infrastructure has proposed to use Rs 80 crore for capital expenditure towards purchase of construction equipment.
It will use Rs 320 crore towards funding long-term working capital requirements.
Around Rs 600 crore will be used for prepayment or scheduled repayment of a portion of certain outstanding borrowings. The remaining funds will be for general corporate purposes.
Afcons Infrastructure is the flagship infrastructure, engineering and construction company of the Shapoorji Pallonji group — a diversified Indian conglomerate — and has a legacy of over six decades.
