Afcons Infrastructure IPO: Key details and parent company, projects, financial performance, risks and GMP
Afcons Infrastructure Ltd, a prominent player in the Indian infrastructure sector and a subsidiary of the Shapoorji Pallonji Group, has launched its Initial Public Offering (IPO) aiming to raise approximately ₹5,430 crores. This article delves into the key details of the IPO, the company’s background, its ongoing projects, associated risks, and market expectations.
Afcons Infrastructure IPO Details
- Opening and Closing Dates: The IPO opened on October 25, 2024, and will close on October 29, 2024.
- Price Band: The shares are priced between ₹440 and ₹463 per share.
- Lot Size: Investors can apply for a minimum of 32 shares, requiring a minimum investment of approximately ₹14,816.
- Total Issue Size: The IPO consists of a fresh issue of shares worth ₹1,250 crores and an offer for sale (OFS) of shares aggregating up to ₹4,750 crores from existing shareholders.
- Listing: Shares are expected to be listed on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on November 4, 2024.
Afcons Infrastructure’s Parent Company Overview
Afcons Infrastructure Ltd is part of the Shapoorji Pallonji Group, which has a rich history dating back to 1865. Established in 1959, Afcons has evolved into one of India’s leading engineering and construction companies. The firm specializes in various sectors including:
- Marine and industrial projects
- Surface transport
- Urban infrastructure
- Hydro and underground developments
- Oil and gas initiatives
With over 76 completed projects across 15 countries and a current order book valued at ₹34,888 crores, Afcons has established itself as a key player in both domestic and international markets.
Notable Projects by Afcons Infrastructure
Afcons has been involved in several landmark projects:
- Chenab Bridge: The world’s tallest single-arch railway bridge.
- Atal Tunnel: The longest highway tunnel above 3,000 meters.
These projects underscore Afcons’ capabilities in handling complex engineering challenges.
Financial Performance of Afcons Infrastructure
The financial health of Afcons Infrastructure is notable:
- Over the last decade, the company has completed projects with a total executed contract value of ₹52,220 crores.
- As of September 30, 2023, it had an order book worth ₹34,888 crores with 67 active projects ongoing.
Risks Associated with Afcons Infrastructure IPO
Investors should be aware of several risks:
- Bidding Risks: The company has faced challenges in securing contracts; for instance, it won only six projects in recent bidding rounds.
- Dependency on Government Contracts: Approximately 68.42% of its order book relies on government contracts, exposing it to potential payment delays and policy changes.
- Capital Intensity: High working capital requirements can strain liquidity; as of September 30, 2023, working capital loans stood at ₹1,390 crores.
- Receivable Delays: Significant overdue receivables amounting to ₹2,100 crores could impact cash flows.
Grey Market Premium (GMP)
As of the latest updates prior to the IPO launch, the Grey Market Premium (GMP) for Afcons Infrastructure shares was reported at around ₹20 to ₹25 per share. This indicates positive sentiment among investors regarding the stock’s potential performance post-listing.
The Afcons Infrastructure IPO presents an intriguing opportunity for investors looking to tap into India’s burgeoning infrastructure sector. With a solid track record of executing complex projects and backing from the Shapoorji Pallonji Group, Afcons is well-positioned for growth. However, potential investors should carefully consider the associated risks before participating in this offering.