Afcons Infrastructure, a leading player in the infrastructure engineering and construction sector, is set to launch its initial public offering (IPO) on October 25, 2024. This flagship company of the Shapoorji Pallonji Group has built a legacy of over six decades, showcasing a robust track record in executing numerous complex and unique Engineering, Procurement, and Construction (EPC) projects both domestically and internationally.

The Afcons Infrastructure IPO aims to raise an impressive ₹5,430 Crores, which consists of a Fresh Issue of 269.97 Lakh Shares valued at ₹1,250 Crores and an Offer for Sale of 902.80 Lakh Shares, totaling ₹4,180 Crores. The subscription period will close on October 29, 2024, with an expected allotment date of October 30, 2024, and the shares will be listed on the BSE and NSE around November 4, 2024.

The price band for the Afcons Infrastructure IPO has been set between ₹440 and ₹463 per equity share. This pricing reflects a market capitalization of approximately ₹17,026 Crores at the upper end of the price band. The lot size for the IPO is 32 shares, requiring a minimum investment of ₹14,816 for retail investors. In contrast, High-Net-Worth Individuals (HNIs) must invest in at least 14 lots (448 shares), translating to a total investment of ₹2,07,424.

The book-running lead managers for the IPO include Jefferies India Private Limited, Nomura Financial Advisory and Securities (India) Private Limited, Nuvama Wealth Management Limited, and SBI Capital Markets Limited. The registrar for the issue is LINK INTIME INDIA PRIVATE LIMITED.

Grey Market Premium and Market Sentiment

The Grey Market Premium (GMP) for the Afcons Infrastructure IPO is currently projected at ₹87, reflecting the company’s strong financial performance. However, it's crucial to note that trading in the grey market is speculative and does not provide a definitive price discovery mechanism prior to the official listing of shares. The GMP is largely influenced by the demand and supply dynamics in an unregulated environment and is provided for educational and informational purposes only.

Live Subscription Status

The Afcons Infrastructure IPO will be available for subscription starting October 25, 2024. Investors are encouraged to stay updated on the live subscription status to gauge the level of interest and participation from the market.

How to Check Allotment Status

The allotment for the Afcons Infrastructure IPO is expected to be released on October 30, 2024. To check the allotment status, investors can follow these steps:

Visit the IPO allotment status page.

Select Afcons Infrastructure Limited IPO from the dropdown menu.

Enter your application number, PAN, or DP Client ID.

Submit the details to view your allotment status.

This straightforward process allows investors to quickly determine their allotment status and take appropriate action.

Objectives of the Afcons Infrastructure IPO

The proceeds from the Fresh Issue of the Afcons Infrastructure IPO will be allocated toward several strategic objectives:

₹800 Million will be utilized for capital expenditure on the purchase of construction equipment.

₹3,200 Million is earmarked for funding long-term working capital requirements.

₹6,000 Million will go toward the prepayment or scheduled repayment of certain outstanding borrowings and acceptances availed by the company.

The remaining funds will be directed towards general corporate purposes.

Financial Performance Overview

Afcons Infrastructure has shown impressive financial metrics over the past few years. For the quarter ending June 30, 2024, the company reported revenues from operations amounting to ₹32,134.70 Million, with an EBITDA of ₹3,716.93 Million. The Profit After Tax (PAT) for the same period stood at ₹915.86 Million.

In terms of fiscal performance:

Fiscal 2024: Revenue of ₹1,36,468.74 Million, EBITDA of ₹15,831.24 Million, PAT of ₹4,497.38 Million.

Fiscal 2023: Revenue of ₹1,28,440.90 Million, EBITDA of ₹13,737.89 Million, PAT of ₹4,108.60 Million.

Fiscal 2022: Revenue of ₹1,12,695.49 Million, EBITDA of ₹10,685.99 Million, PAT of ₹3,576.05 Million.

For the Afcons Infrastructure IPO, the company presents a pre-issue EPS of ₹13.20 and a post-issue EPS of ₹12.22. The pre-issue P/E ratio is calculated at 35.08x, while the post-issue P/E ratio stands at 37.88x, compared to the industry average of 47.91x. The company's Return on Capital Employed (ROCE) for FY24 is 20.18%, with a Return on Equity (RoE) of 13.28%, suggesting that the IPO is fairly priced given the current market conditions.

Investment Recommendation

With a Grey Market Premium (GMP) indicating potential listing gains of 19%, and based on the company's solid financial performance, we recommend that only risk-tolerant investors consider applying for the Afcons Infrastructure Limited IPO for either listing gains or as a part of a long-term investment strategy.

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