Should You Subscribe to Afcons Infrastructure IPO? Price Band Set at ₹440 to ₹463

Afcons Infrastructure Limited, incorporated in 1959, is a large infrastructure engineering and construction company of the Shapoorji Pallonji group. With over six decades of experience, the company has completed 76 projects across 15 countries as of 30th September 2023. Afcons Infrastructure operates in five major business areas: marine and industrial projects, surface transport, urban infrastructure, hydro and underground projects, and oil and gas projects.

The Objectives of the Issue

The Company proposes to utilize the Net Proceeds towards funding the following objects:

• Capital expenditure towards purchase of construction equipment
• Funding long term working capital requirements
• Prepayment or scheduled repayment of a portion of certain outstanding borrowings and acceptances availed by the Company
• General corporate purposes

Highlights of Afcons Infrastructure IPO

Afcons Infrastructure IPO is set to launch with a book-built issue of ₹5,430 crores, comprising both fresh issue and offer for sale. Here are the key details:

• Afcons Infrastructure IPO is set to launch with a book-built issue of ₹5,430 crores. The issue is a combination of fresh issue and offer for sale. Here are the key details of the IPO:
• The IPO opens for subscription on 25th October 2024 and closes on 29th October 2024.
• The price band is set at ₹440 to ₹463 per share.
• The fresh issue comprises 2.7 crore shares worth ₹1,250 crores.
• The offer for sale comprises 9.03 crore shares worth ₹4,180 crores.
• The minimum lot size is 32 shares.
• Retail investors can apply for up to 13 lots (416 shares).
• The company will raise funds from anchor investors on 24th October 2024.
• The allotment is expected to be finalised on 30th October 2024.
• The company will list on both BSE and NSE on 4th November 2024.
• At the upper price band, the post-listing market capitalisation will be ₹17,029 crores.

Afcons Infrastructure IPO - Key Dates

The cut-off time for UPI mandate confirmation is 5:00 PM on 29th October 2024. This deadline is crucial for investors to ensure their applications are processed successfully. Investors are advised to complete their applications well before this deadline to avoid any last-minute technical issues or delays.

Afcons Infrastructure IPO Issue Details/Capital History

Afcons Infrastructure IPO is scheduled from 25th October to 29th October 2024. The total issue size is ₹5,430.00 crores through a combination of fresh issue and offer for sale. The IPO will be listed on BSE and NSE. The pre-issue shareholding is 34,07,38,269 shares.

Afcons Infrastructure IPO Allocation & Minimum Investment Lot Size

The IPO shares are allocated across different investor categories as follows:

Investors can place bids for a minimum of 32 shares and in multiples thereof. The table below illustrates the minimum and maximum investment amounts:

SWOT Analysis: Afcons Infrastructure Ltd

Strengths:

• Strong track record of timely execution of large-scale, complex projects
• Diversified order book across geographies, clients, and business verticals
• Long-standing relationships with clients globally
• Strong financial performance
• Collaboration among internal teams and JV counterparties

Weaknesses:

• Dependence on infrastructure sector performance
• High debt levels

Opportunities:

• Growing infrastructure needs in developing countries
• Potential for expansion into new markets
• Increased government focus on infrastructure development

Threats:

• Economic slowdowns affecting infrastructure spending
• Intense competition in the construction industry
• Geopolitical risks in international markets

Financial Highlights: Afcons Infrastructure Ltd

Below are the consolidated financial results for recent periods:

Afcons Infrastructure Limited has shown steady growth in recent years. The company's revenue increased by 6%, and profit after tax (PAT) rose by 9% between the financial year ending on 31st March 2024 and 31st March 2023. 

Revenue has grown from ₹1,12,695.49 lakh in FY22 to ₹1,36,468.74 lakh in FY24, marking an increase of 21.1% over two years. The company's profitability has also improved, with PAT increasing from ₹3,576.05 lakh in FY22 to ₹4,497.38 lakh in FY24, representing a growth of 25.8% over two years.

Net Worth has shown strong growth, increasing from ₹26,910.30 lakh in FY22 to ₹36,622.52 lakh as of June 30, 2024, which represents an increase of about 36.1% over this period. 

However, Total Borrowings have also increased significantly, rising from ₹15,552.01 lakh in FY22 to ₹33,650.98 lakh as of June 30, 2024, representing an increase of about 116.4% over this period.

The Debt-to-Equity Ratio of 0.91 as of June 30, 2024, suggests a balanced capital structure, although the significant increase in borrowings should be noted.

Investors should consider these financial trends positively while also paying attention to the increasing debt levels. It's important to evaluate the company's ability to manage its growing debt alongside its expansion plans. As always, potential investors should assess these financial trends in conjunction with the company's market position, industry dynamics, and future growth prospects when considering the IPO.