Shapoorji firm Afcons Infra gets SEBI’s nod for its ₹7,000 cr issue; KRN Heat Exchanger’s IPO to open on Sept 25

In a fresh development in the initial public offering (IPO) market, Shapoorji Pallonji group’s flagship infrastructure firm Afcons Infrastructure Limited (AIL) has received final observation from the capital markets regulator, Securities and Exchange Board of India (SEBI), to launch its public offer. In a separate development, Rajasthan-based KRN Heat Exchanger and Refrigeration is expected to launch its IPO on September 25. The price band for the issue is set to be announced later this week.

AIL, a Mumbai-based infrastructure engineering and construction company, which competes with Larsen & Toubro, KEC International, Kalpataru Project International, and Dilip Buildcon, looks to raise ₹7,000 crore by public listing of shares on the domestic exchanges. The company had filed its IPO papers with Sebi on March 28, 2024.

The IPO, with a face value of ₹10 per equity share, is a mix of fresh issue of shares of ₹1,250 crore and an offer for sale of up to ₹5,750 crore by Goswami Infratech Private Limited.

Out of ₹1,250 crore raised from fresh equities, the company intends to use ₹150 crore for capital expenditure towards purchase of construction equipment; ₹350 crore for funding long term working capital requirements; ₹500 crore for prepayment or scheduled repayment of a portion of certain outstanding borrowings and acceptances availed by the company. The remaining fund will be used to meet general corporate purposes.

The offer document showed that the company has reserved half of the issue for qualified institutional buyers, up to 15% for non-institutional bidders, and up to 35% for retail individual bidders. The offer includes a reservation for subscriptions by eligible employees.

Afcons operates across five major infrastructure business verticals - marine and industrial, surface transport, urban infrastructure, hydro and underground, and oil and gas. It ranks among the top international contractors globally in marine and port facilities, bridges, transportation, and transmission line segments based on international revenue for the financial year 2023, according to the Fitch Report.

As of September 30, 2023, Afcons was actively involved in 67 active projects across 13 countries. Its order book increased at a CAGR of 7.6% from ₹26,248.46 crore in the financial year 2021 to ₹30,405.77 crore in the financial year 2023. As of September 30, 2023, it stood at ₹34,888.39 crore.

On the financial front, the restated consolidated revenue from operations during the fiscal year 2023 increased 14.69% to ₹12,637 crore from ₹11,019 crore in FY22. Profit after tax grew 14.89% from ₹358 crore in FY22 to ₹411 crore in FY23. The revenue was driven by spurt in construction contract revenue, rise in business in its urban infrastructure and hydro and underground segments, both in India and overseas. For the six months ended September 30, 2023, revenue from operations stood at ₹6,505 crore, and profit after tax was at Rs 195 crore.

KRN Heat Exchanger to announce price band this week

The Rajasthan-based company, which manufactures fin and tube type heat exchangers for the heat ventilation air conditioning and refrigeration industry, has recently submitted its red herring prospectus with SEBI and is expected to announce its IPO price band later this week. The issue will open for subscription on September 25 and close on September 27, 2024. The allotment of shares is expected to be finalised on September 30, while the tentative listing date is October 3, 2024.

As to the RHP, the initial public offering will be a complete fresh issue of 1.55 crore equity shares with a face value of ₹10 each. There is no offer-for-sale component, so the entire IPO proceeds will be used by the company.

Out the raised capital, the heat exchangers' maker will invest ₹242.46 crore for setting up a new manufacturing facility by its subsidiary KRN HVAC Products at Alwar, Rajasthan. The remaining fund will be used for general corporate purposes. The company has already spent ₹36.44 crore for this manufacturing facility till July 15.

KRN Heat Exchanger and Refrigeration is one of the leading manufacturer of fin and tube-type heat exchangers. The company manufactures copper and aluminium fins and copper tubes heat exchangers, water coils, condenser coils, and evaporator coils, which are used in the domestic, commercial, and industrial Heating, Ventilation, air conditioning and refrigeration (HVAC&R) industry. Its manufacturing facility is located in Neemrana, Rajasthan over an aggregated area of 7,800 square metre.

The company counts Daikin Airconditioning India Pvt Ltd, Schnieder Electric IT Business India Pvt Ltd, Kirloskar Chillers Private Ltd, Blue Star Ltd, Climaventa Climate Technologies Pvt Ltd and Frigel Intelligent Cooling Systems India Pvt Ltd among its key customers. It also export products overseas to countries including UAE, USA, Italy, Saudi Arabia, Norway, Czech Republic, Germany, UK, and more.

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