Afcons Infrastructure IPO: Shapoorji Pallonji arm to float ₹5,430 crore IPO on October 25; 10 things to know from RHP

Afcons Infrastructure IPO: The mainboard initial public offering (IPO) of Shapoorji Pallonji group’s flagship infrastructure engineering and Construction Company, Afcons Infrastructure Limited (AIL), will hit India's primary market to open for subscription on Friday, October 25, 2024. India's leading diversified conglomerate aims to raise ₹5,430 crore via the IPO.

The Mumbai-based multinational company filed its red herring prospectus (RHP) for the IPO on Saturday, October 19. Established in 1959, Afcons Infrastructure Ld has a legacy of over six decades and operates in infrastructure sectors, including marine, surface transport, urban infrastructure, hydro, underground projects, and oil and gas initiatives.

Also Read: IPO-bound Afcons Infrastructure sees record order inflow

"We have a strong track record of executing numerous complex, challenging and unique engineering, procurement and construction (EPC) projects both within India and internationally," said Afcons Infrastructure Ltd in its RHP today. As of June 30, 2024, Afcons Infrastructure had 65 active projects across 12 countries in Asia, Africa and the Middle East, aggregating to an order book of ₹34,888 crore.

Afcons Infrastructure IPO: Here are top 10 things to know from RHP

1.Afcons Infrastructure IPO Key Dates: The Afcons Infrastructure IPO will open for subscription on October 25, 2024, and the bidding window will close on October 29, 2024. The allotment for the Afcons Infrastructure IPO is expected to be finalized on Wednesday, October 30, 2024. The Afcons Infrastructure IPO will list on BSE and NSE, with a tentative listing date fixed as Monday, November 4, 2024.

2.Afcons Infrastructure IPO Price Band: The Afcons Infrastructure IPO price bands have yet to be announced. The RHP did not include details of the public issue's price band, which will be revealed soon.

Also Read: Afcons Infra cuts offer size to ₹5,400 cr after raising ₹3,000 cr before IPO

3.Afcons Infrastructure IPO Details: The Afcons Infrastructure IPO is a book-built issue of ₹5,430.00 crore. The public issue consists of a fresh issue component worth ₹1,250.00 crore and an offer for sale (OFS) worth ₹4,180.00 crore. The cap price shall be at least 105 per cent of the floor price and shall not be greater than 120 per cent of the floor price.

4.Afcons Infrastructure IPO Reservation: Half of the net public issue size (the offer less employees' reservation) has been reserved for qualified institutional buyers (QIBs), some of which may be allocated to anchor investors. 15 per cent of shares are reserved for non-institutional investors (NIIs), and the remaining 35 per cent of shares are for retail investors. 

5.Afcons Infrastructure IPO Promoter Holding: The promoters of the Company are Goswami Infratech Private Limited, Shapoorji Pallonji and Company Private Limited, and Floreat Investments Private Limited, which have a 99.48 per cent holding in the company pre-issue.

Also Read: In a conservative pitch to investors, Afcons says focus on high-margin EPC projects

6.Lead Manager and Registrar of Afcons Infrastructure IPO: ICICI Securities Limited, Dam Capital Advisors Ltd (Formerly IDFC Securities Ltd), Jefferies India Private Limited, Nomura Financial Advisory And Securities (India) Pvt Ltd, Nuvama Wealth Management Limited, and SBI Capital Markets Limited are the book-running lead managers of the Afcons Infrastructure IPO, while Link Intime India Private Ltd is the registrar for the issue.

7.Afcons Infrastructure IPO Objectives: The selling shareholder will receive the proceeds from the OFS, and Afcons Infrastructure will not receive any. Goswami Infratech Pvt Ltd, a promoter group company, is selling shares through OFS. Of the total proceeds from the fresh issue of shares, Afcons Infrastructure has proposed to use ₹80 crore for capital expenditure to purchase construction equipment. It will use ₹320 crore towards funding long-term working capital requirements. Around ₹600 crore will be used for prepayment or scheduled repayment of a portion of certain outstanding borrowings. The remaining funds will be for general corporate purposes.

8.Afcons Infrastructure IPO Listed Peers: According to the RHP, the company's listed peers are Larsen & Toubro (L&T) (with a P/E of 48.49 as of As on March 31, 2023), KEC International Ltd (with a P/E of 97.21), Kalpataru Projects International Limited (with a P/E of 36.72), and Dilip Buildcon Ltd.

Also Read: Shapoorji Pallonji Group’s infrastructure flagship firm Afcons Infrastructure gets SEBI nod for ₹7,000 crore IPO

9.Afcons Infrastructure IPO Key Risks: If the EPC major fails to win new contracts from project owners, the business, financial condition, results of operations, prospects and cash flows could be adversely affected. The business significantly depends on projects awarded by the government or government-owned customers, which are subject to various risks. Such projects contributed to 69.80 per cent of the order book as of June 30, 2024.

10.Afcons Infrastructure Financials: Afcons’ restated consolidated revenue from operations for the fiscal year 2023 rose by 14.69 per cent, reaching ₹12,637.38 crore, up from ₹11,018.97 crore the previous year. Net profit increased by 14.89 per cent, climbing from ₹357.60 crore in FY22 to ₹410.86 crore in FY23. For the six months ending September 30, 2023, the revenue from operations was ₹6,505.39 crore, while net profit stood at ₹195.13 crore.

Afcons Infrastructure Company Details

During the last 11 financial years and the three-month period ending June 30, 2024, Afcons has completed 79 projects across 17 countries with a total historic executed contract value of ₹56,305 crore. Afcons Infrastructure Ltd's projects cover five major infrastructure business verticals.

Also Read: Shapoorji Pallonji in talks to raise $2.4 billion from lenders including PFC

These include marine and industrial projects, covering ports, harbour jetties, dry docks, wet basins, breakwaters, outfall and intake structures, liquefied natural gas tanks, and material handling systems. The projects are in surface transport, covering highways and roads, interchanges, mining-related infrastructure, and railways. The urban infrastructure projects cover elevated and underground metro works, bridges, flyovers, and elevated corridors. 

Afcons implements hydro and underground projects, including dams and barrages, tunnels (including large road tunnels), underground works, water, and irrigation. Afcons Infrastructure takes projects in the oil and gas segment, covering both offshore and onshore oil and gas projects.

The Shapoorji Pallonji Group, established in 1865, has diversified business interests in engineering and construction, infrastructure, real estate, water, energy, and financial services sectors. It has been in the news for selling its stakes in brownfield Gopalpur Port to the Adani Group for an enterprise value of ₹3,350 crore. According to the conglomerate, the divestments are key milestones to reduce debt and accelerate growth, taking advantage of macro trends for demand in the core businesses, in India and overseas.