Afcons Infra IPO: Shapoorji firm to raise ₹5,430 cr at price band of ₹440-463; issue to open on Oct 25

Shapoorji Pallonji group’s flagship infrastructure firm Afcons Infrastructure Limited (AIL) has set a price band of ₹440-463 for its initial public offering that will open for subscription on October 25. The anchor book will open on October 24 and the issue will close on October 29. The allotment of shares is expected to be finalised on October 30, while the tentative listing date is November 4, 2024.

The IPO of Afcons Infrastructure is a combination of fresh issuance of equity shares worth ₹1,250 crore and an offer for sale (OFS) of shares worth ₹4,180 crore by its promoter Goswami Infratech.

The engineering and construction company has cut OFS size from ₹5,750 crore mentioned in the Draft Red Herring Prospectu (DRHP) filed with the SEBI in May this year. As the RHP filed with the regulator, the company has raised ₹2,896 crore in the pre-IPO round, which saw participation from some marquee investors such as GIC Singapore, Enam Holdings, Synergy Capital, 360 One, Quant MF, and others. As many as 29 investors acquired 6.25 crore equity shares (around 18.36% of pre-IPO offer capital) from promoter Goswami Infratech, at the upper end of the price band at ₹463 per share.

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 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 June 2024, it stood at ₹ 31,747 crore.

On the financial front, profit after tax grew 14.89% from ₹358 crore in FY22 to ₹411 crore in FY23. The restated consolidated revenue from operations during the fiscal year 2023 increased 14.69% to ₹12,637 crore from ₹11,019 crore in FY22. The company reported 10 years revenue CAGR of 13% CAGR (FY2014 – FY2024). 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.

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