Afcons Infra IPO: Shapoorji Pallonji Group’s stock list at 8% discount

Shares of Afcons Infrastructure, a subsidiary of the Shapoorji Pallonji Group (SP Group), made a weak debut on the domestic stock exchanges on Monday, which was below Street expectations. The share price of the Mumbai-based engineering and construction company listed at ₹426 on the NSE, down 8% against the initial public offering (IPO) price of ₹463 per share. On the BSE, the stock started trading at ₹430.05, down 7.1% over the issue price.

Post listing, Afcons Infra shares touched a high and low of ₹434.55 and ₹420.25, respectively, on the NSE, while the market capitalisation stood at ₹16,098 crore. On the BSE, the counter hit a high and low of 450 and 419.85, respectively. The weakness in the SP Group stock was in line with broader market, as domestic equity benchmark Sensex and Nifty were down over 1% in early trade.

Ahead of listing, shares of Afcons Infra was commanding a grey market premium (GMP) of ₹15 in the unlisted market, indicating listing price to be around ₹478, up 3.24%. Last week, post closure of the IPO, the stock was trading at discount in grey market, falling as much as minus ₹3 from a high of ₹40 on October 28. 2024.

 The ₹5,430 crore IPO of Afcons Infra, issued at a price band of ₹440-463, received muted response from investors, with the issue subscribing 2.77 times. The issue received bids for 22.78 crore shares worth ₹10,547.77 crore against 8.23 shares on offer, as per exchange data.

The quota reserved for non-institutional investors (NIIs) and qualified institutional buyers (QIBs) was subscribed 5.31 times and 3.99 times, respectively, whereas employee portion was subscribed 1.77 times. The retail quota, however, failed to fully subscribe as it received 0.99 times bids. The company had reserved half of the issue for QIBs; 15% for NIIs; and 35% for retail individual bidders. The lot size was 32 shares and in multiple thereafter and the minimum application amount for retail investors was ₹14,816.

The IPO was 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.

Ahead of opening of the IPO, the Mumbai-based company raised ₹1,621 crore from anchor investors. It allocated over 35 lakh equity shares to 80 anchor investors at the upper end of the IPO price band at ₹463 per share on October 24, 2024.

The company has already 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 ₹463 per share.

Out of ₹1,250 crore raised from fresh equities, Afcons 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.

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