Afcons Infrastructure Limited IPO

The Afcons Infrastructure Limited IPO is one of the most anticipated public offerings in the Indian market. For investors seeking to dive into the infrastructure sector, this IPO presents a compelling opportunity. Afcons, a well-known player in civil construction and engineering, is preparing to raise significant capital to expand its operations. In this article, we break down the key aspects of the Afcons IPO to help beginner-level investors understand what this offering entails and whether it suits their investment portfolios.

Afcons Infrastructure Limited IPO details

The Afcons Infrastructure Limited IPO is a combination of a fresh issue and an offer for sale. The company plans to issue up to Rs. 1,250 crore worth of new equity shares, while its promoters will sell equity shares worth Rs. 5,750 crore. The total issue size of the IPO is Rs. 7,000 crore. The IPO is being offered through the 100% Book Built method, with shares reserved for Qualified Institutional Buyers (QIBs), Non-Institutional Bidders (NIBs), Retail Individual Bidders (RIBs), and eligible employees.

Offer structure

The IPO consists of a fresh issue and an offer for sale (OFS). The fresh issue aims to raise Rs. 1,250 crore to support the company’s operational growth, while the OFS involves the sale of shares by Goswami Infratech Private Limited, one of Afcons' promoters. The total equity shares offered in the OFS are valued at Rs. 5,750 crore. The face value of each equity share is Rs. 10. The price band for the IPO will be announced closer to the issue opening date, and the final pricing will be determined based on demand.

Why is Afcons Infrastructure Limited going public?

Afcons Infrastructure is going public to raise funds to fuel its growth initiatives and repay or prepay some of its existing debt. The capital infusion from the fresh issue will help the company expand its project pipeline, strengthen its financial position, and enhance its capabilities in large-scale infrastructure projects. The IPO will also provide the promoters with an opportunity to monetize part of their holdings through the OFS.

About Afcons Infrastructure Limited

Afcons Infrastructure Limited has a long and storied history dating back to 1959. Initially a partnership between a Swiss company and Hazarat & Company, it has evolved into a leading infrastructure company in India. Key highlights include:

• Industry presence: Afcons operates across multiple sectors, including transportation, marine infrastructure, hydro and tunneling, and industrial structures.
• Global projects: The company has successfully executed projects in over 25 countries.
• Promoters: The company is promoted by Goswami Infratech Private Limited, Shapoorji Pallonji and Company Private Limited, and Floreat Investments Private Limited.

Afcons Infrastructure Limited’s financial performance

Here are the financial performance details for Afcons Infrastructure Limited:

Financial metrics	FY 2024	FY 2023	FY 2022	FY 2021
Assets	Rs. 16,233.64 crore	Rs. 14,301.25 crore	Rs. 12,973.77 crore	Rs. 12,489.94 crore
Revenue	Rs. 13,646.88 crore	Rs. 12,844.09 crore	Rs. 11,269.55 crore	Rs. 9,521.12 crore
Profit After Tax (PAT)	Rs. 449.76 crore	Rs. 410.86 crore	Rs. 357.61 crore	Rs. 169.91 crore
Net worth	-	Rs. 3,155.06 crore	Rs. 2,691.03 crore	Rs. 2,369.47 crore
Reserves and Surplus	Rs. 2,718.55 crore	Rs. 2,132.55 crore	-	-
Total borrowing	-	Rs. 1,562.82 crore	Rs. 1,555.20 crore	Rs. 1,588.59 crore

Strength and risks of Afcons Infrastructure Limited

Afcons has many strengths, but potential investors should also consider the associated risks.

Strength of Afcons Infrastructure Limited

• Strong track record: Afcons has been in the industry for over six decades and boasts a solid reputation in civil engineering.
• Global footprint: The company has successfully completed projects across Asia, Africa, and the Middle East.
• Diverse portfolio: Afcons operates in various sectors including roads, bridges, ports, and railways, providing it with a stable business base.

Top risks to consider before applying for the Afcons Infrastructure Limited IPO

• Project delays: Delays in project execution can impact revenue and cash flow.
• Dependency on government projects: A significant portion of Afcons’ revenue comes from government contracts, which may be vulnerable to policy changes.
• Competitive industry: The infrastructure sector is highly competitive, which could impact future project wins.

What’s in it for investors?

Investors interested in Afcons Infrastructure Limited's IPO have several key benefits to consider. The company’s extensive experience in executing complex infrastructure projects, both in India and globally, gives it a competitive edge. Furthermore, its diverse project portfolio across multiple sectors ensures a stable revenue stream. However, investors should also weigh the risks of project delays and sector-specific challenges before making an investment decision.

Conclusion

The Afcons Infrastructure Limited IPO offers investors an opportunity to gain exposure to a well-established player in the infrastructure space. With its solid track record, diverse portfolio, and strong financials, Afcons presents an appealing case for those looking to invest in long-term infrastructure growth. However, as with all investments, it is important for potential investors to conduct their own due diligence and consider the associated risks before applying.