Should You Jump on the Afcons Infrastructure IPO Train?

Afcons Infrastructure IPO, valued at ₹5,430 crore, is now open for investors, offering a chance to participate in one of India’s major infrastructure companies. This IPO appeals to investors seeking to capitalise on India’s ongoing infrastructure growth, especially given Afcons’ extensive experience as part of the Shapoorji Pallonji Group.
Overview of Afcons Infrastructure IPO 

Afcons Infrastructure IPO opened for subscription on October 25, 2024, and will close on October 29, 2024. It includes a fresh issue of 2.7 crore shares (₹1,250 crore) and an offer for sale of 9.03 crore shares (₹4,180 crore). The price band is set between ₹440 and ₹463, with a minimum lot size of 32 shares. Afcons Infrastructure will be listed on both the BSE and NSE, with November 4, 2024, as the expected listing date. Retail investors can participate with a minimum investment of ₹14,816. Additionally, employees are offered a ₹44 per share discount, adding to the IPO’s appeal.

Why should you consider investing in Afcons Infrastructure IPO? 

Investing in Afcons Infrastructure IPO offers several benefits. With over 60 years in the construction and engineering sectors, Afcons Infrastructure has successfully delivered large-scale projects across multiple infrastructure areas. Backed by the well-known Shapoorji Pallonji Group, the company holds a trusted position in the industry. The company handles key projects like highways, bridges, and marine constructions, which are essential to India’s infrastructure growth. With the government’s focus on infrastructure development, Afcons Infrastructure is well-placed to benefit from this focus, making the IPO appealing to investors looking at long-term growth potential.

Afcons Infrastructure Ltd. Financials

Afcons Infrastructure has shown steady financial growth over recent years. Its revenue rose from ₹1,12,695.49 lakh in FY22 to ₹1,36,468.74 lakh in FY24, marking a 21.1% increase. Profit After Tax (PAT) also grew, from ₹3,576.05 lakh in FY22 to ₹4,497.38 lakh in FY24, a 25.8% increase. As of June 30, 2024, total assets were valued at ₹1,71,845.75 lakh, while net worth reached ₹36,622.52 lakh—a 36.1% growth since FY22. Afcons’ borrowings increased to ₹33,650.98 lakh by June 2024, representing a 116.4% rise since FY22. The debt-to-equity ratio of 0.91 suggests balanced financing but underscores the importance of good debt management.

The Return on Equity (ROE) stands at 10.55%, reflecting the company’s efficiency in generating profit relative to shareholders' equity, while the Return on Capital Employed (ROCE) is at 14.89%, indicating effective use of capital in generating returns.

Market Position and Growth Prospects 

Afcons Infrastructure has a strong market position with projects across Asia, Africa, and the Middle East. With active projects in marine, urban, and oil & gas sectors, the company is well-prepared to benefit from India’s focus on infrastructure, supported by the National Infrastructure Pipeline (NIP). Afcons’ order book is currently valued at ₹348.88 billion, with 67 projects ongoing across 13 countries. This robust portfolio shows Afcons’ ability to manage various infrastructure projects, positioning it for future growth. As demand for quality infrastructure rises, Afcons stands to gain from its experience and established market presence, making the IPO an attractive option for growth-focused investors.

Key Strengths and Competitive Advantages of Afcons Infrastructure IPO

Afcons Infrastructure’s competitive strengths include its affiliation with the Shapoorji Pallonji Group, which is known for its stability and credibility. The company’s proven ability to execute large projects, from marine and industrial structures to urban developments, highlights its expertise and reliability. Afcons’ diversified project base across different infrastructure segments helps it withstand sector-specific fluctuations, giving it a more resilient structure. The company’s resources, skilled teams, and strong partnerships further enhance its ability to deliver complex projects on time. These strengths make Afcons a dependable investment for those seeking steady returns in the infrastructure sector.

Read more about Afcons Infrastructure IPO

Risks and Challenges 

Like any investment, Afcons Infrastructure IPO comes with certain risks. Infrastructure projects are sensitive to government regulations, economic conditions, and project timelines. Additionally, Afcons’ debt levels have increased, which could be concerning if project costs rise or timelines are extended. Changes in raw material prices or labour shortages may also impact profitability. While Afcons’ strengths help to reduce some of these risks, potential investors should consider these factors and ensure the investment aligns with their financial objectives.

IPO Subscription Details and Allotment Process 

The Afcons Infrastructure IPO subscription opened on October 25, 2024, and will close on October 29, 2024. As of Day 1 (1:03:10 PM), the IPO has received a good response across investor categories, with the retail category subscribed 0.07 times, NII 0.04 times, and QIBs yet to fully participate. Afcons Infrastructure IPO application process can be done through the ASBA (Applications Supported by Blocked Amount) process via banks, brokers, or UPI. Allotment results are expected on October 30, 2024, with shares credited to demat accounts by October 31, 2024, and listing on November 4, 2024.

Retail investors can join with a minimum investment of ₹14,816, while high-net-worth individuals (HNIs) may opt for larger investments based on the IPO guidelines.

Once the Afcons Infrastructure IPO allotment is finalised on October 30, 2024, investors can check their allotment status in a few simple ways. You can visit the Link Intime India website, select the Afcons IPO from the dropdown, and enter your PAN, Demat, or application number to view the result. Alternatively, check the BSE’s allotment page by selecting “Afcons Infrastructure IPO” and providing your PAN and application details. ASBA applicants can log in to their bank’s online portal to verify under “IPO Services,” while Demat account holders can check directly in their portfolio if shares are credited.

Conclusion - Should You Invest in Afcons Infrastructure IPO? 

Afcons Infrastructure IPO provides a good opportunity to invest in an established infrastructure company backed by a strong promoter. With a solid track record, growing financials, and a diversified project portfolio, the IPO holds growth potential. However, prospective investors should also consider the associated risks. 

This article is for educational purposes only and does not constitute investment advice.