| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 440 to ₹ 463 | 32 | 25th Oct, 2024 – 29th Oct, 2024 | ₹ 5,430.00 Cr |
About Afcons Infrastructure Ltd IPO
Afcons Infrastructure Ltd. (AIL) is an infrastructure, engineering and construction company, part of the Shapoorji Pallonji group. It is one of India’s largest international infrastructure company with a track record of executing numerous EPC projects in the domestic and international markets. In the last eleven financial years and Q1FY5, the company has completed 79 projects across 17 countries with a historic executed contract value of Rs. 56,305 crores. Currently, the company has 65 active projects across 12 countries with an aggregated order book of Rs. 31,747 crores. The company has a comprehensive global presence, with Asia, Africa, and the Middle East as the key markets. The overseas market contributes 24.4% of the order book, while the domestic market contributes the rest. The company engages across five major business verticals, namely: (i) Marine & Industrial, (ii) Surface Transport, (iii) Urban Infrastructure, (iv) Hydro & Underground and (v) Oil & Gas. Amongst the verticals, urban infra is the largest contributor, followed by hydro & underground, surface transport, marine & industrial and oil & gas. The company’s client base consists of three types of entities: (i) Government entity, (ii) Multilateral entity, and (iii) Private entity, with the government being the largest client (69.8%) followed by multilateral (20.1%) and private at 10.1%. As of June 30, 2024, the cost of materials consumed was 25.9% of the total expense. The company has the following types of contracts through which it caters to clients: (i) EPC contracts, (ii) Item rate contracts and (iii) Cost-plus contracts. The revenue contribution of contracts as of June 30, 2024 is: EPC contracts (72.3%), Item rate contracts (27.6%) and Cost-plus contracts (0.1%). A similar pattern is reflected on the order book front, with EPC contracts contributing 59.5% of the book while Interest rate contracts contribute about 40.5%.
Objective of the Afcons Infrastructure Ltd IPO
The company proposes to utilize net proceeds towards funding the following objects:
- Capital expenditure towards the purchase of construction equipments;
- Funding long-term working capital requirements;
- Prepayment or scheduled repayment of a portion of certain outstanding borrowings and acceptances availed by the company; and
- General corporate purposes.
Rationale To Invest In Afcons Infrastructure Ltd IPO
Reliable execution and diverse capabilities ensure stickiness amongst clientele
The company boasts a healthy track record of timely execution across demographics. A healthy record highlights the company’s ability to capitalize on its design, engineering capabilities, management expertise and internal management system. Moreover, the company’s ability to efficiently leverage its experience to execute projects across geographies ensures an added advantage in project execution and delivery. In addition, the company executes certain projects through JVs, further improving its competitive position. Collaborating with other companies enables AIL to leverage its expertise, networks, and capabilities. Its diversified offerings further enhance its ability to cater to the varying needs of customers across demographics. The company further benefits from its group’s brand image and market presence, supporting its growth. The company also has access to the Group’s network, enabling strategic collaboration, business development opportunities and knowledge sharing. Further, the company maintains a strategic equipment base comprising a wide range of heavy machinery and specialized equipment, which, along with its in-house capabilities, has been instrumental in winning several key deals. All the given elements set the company with a solid foundation for future growth.
Strategic operational framework to drive sustainable growth
The company’s systematic risk management system helps it identify various operational risks. Its assessment includes a review of credit risk, market risk, and operational risk associated with the project. This evaluation ensures sound decision-making processes. Moreover, through its project selection process, the company aims to maintain a diverse and high-quality order book, which is in tandem with its aim to maximize its opportunities in the existing market and concurrently expand its footing in new geographies, capitalizing on diverse growth trends in India and overseas. Additionally, its constant focus on procuring and harnessing knowledge from its projects has enabled the company to execute projects efficiently. The company also follows an asset-right model, ensuring efficient working capital management and cost optimization. The prudent efforts taken by the company are underscored by the financial performance it has delivered in the past, with improving margins and steady top-line growth. Overall, these frameworks will likely contribute to steady growth and improved financial performance in the future and have a comprehensive edge over competitors.
Valuation of Afcons Infrastructure Ltd IPO
Afcons Infrastructure Ltd. (AIL) is a global company engaged in infrastructure and EPC business. The company has a significant presence in the Indian and overseas markets. By capitalising on its strength in design, engineering and management and leveraging its robust network and strategic collaboration, the company is set to achieve sustainable growth. Its prudent framework, diverse offerings and asset-right model further position the company to navigate the varying market trends and maintain a competitive edge. On the economic front, India is projected to be the fastest-growing construction market in the world, growing at a CAGR of 9.5% to 10.0% during FY2023-28. The growth in the Indian construction industry will be supported by high levels of urbanization, rising infrastructure investments, surging power demand and robust industrial growth. Owing to the company’s strong presence in the market, strong parentage, a wide array of solutions and a higher concentration of government projects, the company is well-positioned to benefit from the economic tailwinds. The company reported strong financial growth between FY22 and FY24, with a CAGR of 9.7% in revenue, 20.8% in EBITDA, and 12.1% in PAT. For FY24, the EBITDA and PAT margins were 10.3% and 3.4%, respectively, while Q1FY25 saw margins of 11.2% and 2.9%, respectively. The company maintained a robust ROE of 12.5% and an ROCE of 13.7% in FY24. The company is valued at a P/E ratio of 35.1x on the upper price band based on FY24 earnings, which is lower than the average P/E of the industry. Given its strong position in the market, the company is poised to capitalize on emerging market opportunities. Therefore, we recommend a “SUBSCRIBE” rating for the issue from a medium to long-term perspective.
What is the Afcons Infrastructure Ltd IPO?
Afcons Infrastructure IPO is a book built issue of Rs 5,430.00 crores. The issue is a combination of fresh issue of 2.7 crore shares aggregating to Rs 1,250.00 crores and offer for sale of 9.03 crore shares aggregating to Rs 4,180.00 crores. Login to your account now.
How to apply for the Afcons Infrastructure Ltd IPO through StoxBox?
To apply for the Afcons Infrastructure Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Afcons Infrastructure Ltd IPO open?
Afcons Infrastructure LtdIPO is opening on 25th October 2024. Apply Now
What is the lot size of the Afcons Infrastructure Ltd IPO?
The Lot Size of Afcons Infrastructure Ltd IPO is 32 equity shares. Login to your account now
When is the Afcons Infrastructure Ltd IPO allotment date?
The allotment Date for Afcons Infrastructure Ltd IPO is 30th October 2024. Login to your account now.
When is the Afcons Infrastructure Ltd IPO listing date?
The listing Date for Afcons Infrastructure Ltd IPO is 04th November 2024. Login to your account now
What is the minimum investment required for the Afcons Infrastructure Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,816. Login to your account now
What is the maximum investment allowed for theAfcons Infrastructure Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 192,608. Login to your account now
What are the risks associated with investing in the Afcons Infrastructure LtdIPO?
- If any of the company’s projects are terminated prematurely, the company may not receive payment.
- Certain corporate records and filings contain factual inaccuracies, and certain historical corporate and secretarial records are not traceable. This uncertainty raises the risk of future regulatory actions or penalties, potentially impacting their financial condition and reputation.
- The company requires various statutory and regulatory permits and approvals to operate. Failure to obtain, renew or maintain these permits may lead to operational risks.
When will the Afcons Infrastructure Ltd IPO shares be credited to my Demat account?
The Afcons Infrastructure Ltd IPO be credited to the account on allotment date which is 31st October 2024. Login to your account now
Where can I find the Afcons Infrastructure Ltd IPO prospectus?
The prospectus of Afcons Infrastructure Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Afcons Infrastructure LtdIPO?
| IPO Open Date | Friday, October 25, 2024 |
| IPO Close Date | Tuesday, October 29, 2024 |
| Basis of Allotment | Wednesday, October 30, 2024 |
| Initiation of Refunds | Thursday, October 31, 2024 |
| Credit of Shares to Demat | Thursday, October 31, 2024 |
| Listing Date | Monday, November 4, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on October 29, 2024 |
