Afcons Infra’s Rs 5,430 Cr IPO Opens Today, Price Band Of Rs 440-463 Per Share

The initial public offering (IPO) of Mumbai-based Afcons Infrastructure opens for subscription today, 25 October, with the bidding window set to close on 29 October. The Shapoorji Pallonji Group company aims to raise Rs 5,430 Crore through this offering.

Ahead of the IPO, Afcons raised Rs 1,621 Crore from anchor investors, including prominent names like GIC, HDFC Mutual Fund, ICICI Prudential MF, BlackRock, Fidelity Investments, Goldman Sachs, HSBC Group, and Nomura AM, among others. The company’s shares are priced within a fixed band of Rs 440-463 per share, with a minimum bid size of 32 equity shares and multiples thereafter.

The IPO consists of a fresh issue of 2.7 Crore shares valued at Rs 1,250 Crore and an offer for sale (OFS) component of 9.03 Crore shares, amounting to Rs 4,180 Crore. Proceeds from the OFS will go to the selling shareholder, with Goswami Infratech, a promoter group entity, selling shares in this round.

As of 30 June 2024, Afcons reported 65 active projects across 12 countries, backed by an order book worth Rs 31,747 Crore. Its FY24 order book to sales ratio of 2.4 times ensures revenue visibility over the next 2 to 3 years. The company was also the ‘L1 bidder’ for projects valued at Rs 10,732.36 Crore as of 30 September, 2024.

Afcons demonstrated robust financial performance for FY24, recording a Return on Capital Employed (ROCE) of 15.3 per cent, a Return on Equity (ROE) of 12.5 per cent, EBITDA margins of 10.3 per cent, and Profit After Tax (PAT) margins of 3.4 per cent, highlighting its execution capabilities among industry peers.

The company’s revenue has grown at a Compound Annual Growth Rate (CAGR) of 10 per cent, rising from Rs 11,019 Crore in FY22 to Rs 13,268 Crore in FY24, while PAT reached Rs 449.7 Crore, reflecting a CAGR of 12 per cent over the FY22-24 period. Afcons’ debt-to-equity ratio stands at 0.9 times, expected to improve to 0.6 times post-IPO. At the upper price band of Rs 463, Afcons trades at a P/E ratio of 38 times for FY24, aligning with its industry peers.

Post-listing, Afcons Infrastructure is projected to have a market capitalisation of Rs 17,029 Crore at the top end of the price range.

Funds from the fresh issue will be allocated as follows: Rs 80 Crore for capital expenditure on construction equipment, Rs 320 Crore for long-term working capital requirements, Rs 600 Crore towards prepayment or scheduled repayment of select outstanding debts, with the remainder for general corporate purposes.

The IPO reserves 50 per cent of the issue for institutional investors, 15 per cent for non-institutional investors, and the remaining 35 per cent for retail investors.

Prior to the IPO, Afcons raised Rs 2,967 Crore from various investors. This pre-IPO round included entities such as GIC Singapore, Enam Holdings (Akash Bhanshali), Synergy Capital, 360 One, M&G Investments, Think Investments, Discovery Capital Management, ArcelorMittal’s Artian Investment, Madhusudan Kela, White Oak, and others.