Afcons Infrastructure IPO 2024 Opens for Bidding: Should You Invest?

Afcons Infrastructure Limited, a prominent player in India’s infrastructure sector, has launched its much-anticipated IPO on October 25, allowing investors an opportunity to own a part of its legacy. The IPO is priced between Rs 440 and Rs 463 per share, with a minimum bid of 32 shares.

Afcons Infrastructure IPO 2024 Opens for Bidding: Should You Invest?

Afcons Infrastructure Limited, one of India’s major players in infrastructure, has at last floated its highly anticipated IPO on 25 October, offering investors the opportunity to be the owners of this legacy company. The price for the IPO falls within the bracket of Rs 440 to Rs 463 per share with a minimum bid size of 32 shares. Fresh equity issuer: Rs 1,250 cr; OFS by promoter, Goswami Infratech: Rs 4,180 cr; total size: Rs 5,340 cr. The issue will open on October 17 and will close on October 29. The IPO shares will be listed on both BSE and NSE on November 4, 2024.

Afcons Infrastructure IPO Schedule

Afcons Infrastructure IPO Schedule

Event Date
IPO Open Date Friday, October 25, 2024
IPO Close Date Tuesday, October 29, 2024
Basis of Allotment Wednesday, October 30, 2024
Initiation of Refunds Thursday, October 31, 2024
Credit of Shares to Demat Thursday, October 31, 2024
Listing Date Monday, November 4, 2024
Cut-off time for UPI mandate confirmation 5 PM on October 29, 2024

Company Profile

The company was established in the year 1959; Afcons Infrastructure is a part of the Shapoorji Pallonji Group, which on board six decades of heritage and learning in infrastructure engineering and construction. It brings verticals in marine and industrial projects, surface transport, urban infrastructure, hydro, underground projects, and sectors involving the oil & gas. Afcons has a robust 67 ongoing projects spread over 13 countries with an order book worth Rs 34,888 crore as of 30 September 2023.

Some of the notable projects include flagship projects, such as the Ghana Rail Project and the Chenab Bridge in Jammu & Kashmir. These themselves are a testimonial to Afcons’ delivery of complex engineering works across the globe, thus underlining its credibility and capabilities.

Financial Performance

Afcons has reported Rs 13,646.88 crore revenue and Rs 449.76 crore net profit for FY24, with robust financial growth. Net profit for the quarter ending June 2024 was reported at Rs 91.59 crore with revenue of Rs 3,213.47 crore. With global presence and wide expertise, Afcons has continued its solid financial performance through continued growth in its project base.

Financial Performance through Strategic Use of Funds from IPO

Proceeds will be utilized across various initiatives, including capital expenditure, repayment of certain borrowings, and long-term working capital. The strategy aims to make operations easier and spur growth by decreasing debt levels and making cash free for the present and future projects.

Key Highlights and Broker Views

KR Choksey has a “subscribe” rating while mentioning that the financials are stable and at a Price-to-Earnings multiple of 36 times for Afcons. They further elaborate on the substantial experience and the company’s proactive growth approach; hence it is in an extremely favorable position as an investment, which is perceived to have a high prospect and rapid market growth.

Chola Securities
Chola Securities assigns a “neutral” rating with the assessment that Afcons has strong roots in the Shapoorji Pallonji Group. The brokerage remains cautious despite the success because, with the valuation of the company up, the growth rate in revenues is rather moderate. Yet, it does not discount the track record of its industry standing and execution.

Marwadi Financial Services
Marwadi Financial Services has recommended a ‘subscribe’ rating. The group cites diversified order book and established client relationship of Afcons, while elaborating that the IPO appears attractively priced at a P/E of 38 times based on EPS projections in relation to peers Larsen & Toubro and KEC International.

Nirmal Bang Securities
NR Portfolio has graded the IPO “neutral,” as Afcons’ growth, though steady, is a tad relatively slower than that of peers. Though the entity maintains a strong return on capital employed (ROCE), valuation appears slightly high in respect to the growth trajectory at which it is placed today. Moderate returns are expected from investment in the security, and the rating reflects the same with caution.

Canara Bank Securities
The Canara Bank Securities has given a “subscribe” rating based on the diversified portfolio of projects that Afcons has undertaken and its consistent performance. The dependency of the company on government projects poses a risk, but such a strategic position within the infrastructure sector does dilute the same level of risks. Canara Bank, thus, feels that this IPO will be a long-term sound investment.

Swastika Investmart
Long term “subscribe” rating by Swastika Investmart which focuses on long-term returns. Stability in Afcons is there and it is now well-poised for growth ahead. Market conditions prevailing currently may influence the listing of Afcons but Swastika feels that long-term investor will indeed garner all benefits from an established market presence and promising financials of Afcons.

StoxBox
It recommends subscription for StoxBox on account of the excellent market presence of Afcons and support from Shapoorji Pallonji. The brokerage likes its RoE/ RoCE, which are slight indices better than the industry average, and concludes that an IPO is a medium- to long-term opportunity.

Arihant Capital Markets
Arihant Capital gives an “subscribe” rating based on such cost optimization and geographical expansion efforts by Afcons. The IPO is pitched at a P/E of 46.48 times at the upper band, which Arihant feels reasonable given order book strength and profit margins of the company.

Risks to Consider

Dependence on Government Capex: Most projects of Afcons depend on government expenditure, which could be sensitive to policy changes and economic slumps.

Low Profit Margins: The PAT margins of Afcons are somewhat lower than some of its peers; in terms of investor confidence, it is affected while the market conditions are in flux.

Market Conditions: Generally, the infrastructure stocks tend to yield to economic conditions along with changes in interest rates and a rise in levels of inflation. All these will affect the short-term perfo of shares.

Conclusion

Conclusion Afcons Infrastructure’s IPO brings together seasoned industry experience and strategic growth potential along with properly managed finances. The company has a wide spread of projects and a secured pipeline across global markets. A best deal for long-term investor-looking bucks, the IPO may prove rewarding. The subscription period ends on October 29. Interested investors should weigh the strengths and risks and decide.
Summing it all, the IPO of Afcons Infrastructure does look good enough by its legacy, financial health, and diversified project portfolio. Therefore, although some analysts have advised caution, on overall, the sentiment seems very positive to subscribe for potential long-term gains.
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Disclaimer:

All above recommendations are of the market analysts. Neither the author, nor the brokerage firm, nor Stockstoday.in will be responsible for any loss arising out of any such decision taken based upon this information. All users are cautioned to take their own expert advice prior to making any investment decision.

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