Afcons Infrastructure Limited has announced the launch of its ₹5,430 Crores IPO, opening up a significant investment opportunity for retail and institutional investors. A prominent player in the infrastructure and construction space, Afcons Infrastructure is a part of the Shapoorji Pallonji Group, one of India’s leading conglomerates. With a robust portfolio of Engineering, Procurement, and Construction (EPC) projects both domestically and internationally, Afcons Infrastructure has been at the forefront of complex projects for over six decades. This IPO represents a chance to invest in a well-established, high-potential infrastructure giant that has consistently demonstrated operational excellence.

The Afcons Infrastructure IPO comprises a Fresh Issue of 269.97 lakh shares valued at ₹1,250 Crores, along with an Offer for Sale of 902.80 lakh shares totaling ₹4,180 Crores. This Book Built Issue will be open for subscription from October 25, 2024, to October 29, 2024. The IPO price band has been set between ₹440 to ₹463 per share, with a lot size of 32 shares. For retail investors, the minimum investment stands at ₹14,816, while High-Net-Worth Individuals (HNIs) will need to invest a minimum of 14 lots, totaling ₹2,07,424. Jefferies India Private Limited, Nomura Financial Advisory and Securities (India) Private Limited, Nuvama Wealth Management Limited, and SBI Capital Markets Limited have been appointed as the book-running lead managers for the IPO, with Link Intime India Private Limited serving as the registrar.

Key Dates and Subscription Timeline

The subscription period for the Afcons Infrastructure IPO runs from October 25 to October 29, 2024. The IPO allotment is expected on October 30, 2024, followed by a tentative listing on the BSE and NSE on November 04, 2024. On October 26, 2024, by 3:00 PM, the IPO subscription status reflected a subscription rate of 0.10 times on the first day. This live data can be monitored on the NSE website under the Afcons Infrastructure IPO section.

Anchor Investors have already shown interest in Afcons Infrastructure, with Usha Financial Services raising ₹1,621.49 Crores by purchasing shares at ₹463 each in collaboration with the book-running lead managers. This strong anchor investor participation reflects the confidence of institutional investors and adds to the IPO's credibility.

Financial Metrics and Valuation

Afcons Infrastructure has reported strong financial performance in recent years. For the fiscal period ended June 30, 2024, revenue reached ₹32,134.70 million, while EBITDA stood at ₹3,716.93 million. Over the last three fiscal years, the company has shown a steady growth trajectory, with annual revenues increasing from ₹1,12,695.49 million in FY2022 to ₹1,36,468.74 million in FY2024. EBITDA and profit after tax (PAT) have also grown consistently, showing a robust performance track. The pre-issue P/E ratio stands at 35.08x, and the post-issue P/E ratio is 37.88x, compared to the industry P/E of 47.91x, suggesting a fairly reasonable valuation for the IPO price range.

Grey Market Premium (GMP) for Afcons Infrastructure IPO, noted at ₹87, indicates a potential 19% listing gain, making it appealing for investors willing to take on some market risk. However, it’s essential to understand that GMP values fluctuate based on demand and supply dynamics in the informal market. Thus, investors should proceed with caution and treat this information as educational.

Objectives of the Afcons Infrastructure IPO

The proceeds from the fresh issue are aimed at strengthening Afcons Infrastructure’s financial health and expanding operational capacity. Key areas of investment include:

1. ₹800 million for capital expenditure towards purchasing advanced construction equipment.
2. ₹3,200 million to meet long-term working capital needs.
3. ₹6,000 million for prepaying or repaying outstanding debts, reducing financial leverage.
4. General corporate purposes, providing flexibility in future growth initiatives.

This capital allocation strategy ensures that the company maintains its competitive edge while supporting its ongoing projects and future expansion plans. With this IPO, Afcons Infrastructure can address immediate funding requirements while paving the way for long-term growth.

Key Personnel and Management

Afcons Infrastructure’s experienced leadership team, including Satish G. Paretkar, Avinash Patil, Gokul Javalikar, Minoo Motiram Lalvani, V. Ashwini Kumar, and Sandeep Desai, brings valuable expertise, steering the company through various market dynamics. Their seasoned management has played a crucial role in maintaining the company's growth and its impressive portfolio of domestic and international projects.

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