Afcons Infrastructure IPO Day 2 highlights: Issue subscribed 36%. Check latest GMP, subscription details & more

The IPO of Afcons Infrastructure was subscribed just 36% at the end of the second day of the bidding process on Monday, suggesting weak demand from investors. The IPO received 3,15,81,824 bids against 8,66,19,950 shares on offer.

The employee portion was the only one that was fully subscribed at  1.01 times. Meanwhile, the portion reserved for retail investors saw 36% bids. The quota allocated to non-institutional investors garnered 72% subscription and the one reserved for qualified institutional investors received just 8% bids.

Afcons Infrastructure Ltd (AIL) secured ₹1,621 crore from anchor investors, just one day before its initial share sale opens for public subscription.

The anchor book saw participation from both foreign and domestic institutions, including HDFC Mutual Fund, ICICI Prudential Mutual Fund, BlackRock, Fidelity Investments, Goldman Sachs, HSBC Group, Nomura, Nippon India Mutual Fund, Enam Holdings, Mirae Mutual Fund, Quant Mutual Fund, Invesco Mutual Fund, Eastbridge, Amundi, Invesco Hong Kong, and SBI General Insurance.

“Afcons Infrastructure is strategically positioned for sustained growth within the infrastructure sector, capitalizing on its extensive experience in executing complex engineering, procurement, and construction projects. The company's robust capabilities in marine, urban infrastructure, and hydro projects, coupled with strategic relationships with key clients, enhance its competitive edge. Afcons is actively pursuing geographical diversification, focusing on emerging markets in Africa and the Middle East while continuously innovating its project execution methodologies. In light of Afcons Infrastructure's robust growth potential, solid financial performance and strategic initiatives aimed at market expansion, we recommend a 'SUBSCRIBE' rating for the company,” said the brokerage.

The initial public offering (IPO) of Afcons Infrastructure was subscribed 27% so far on the second day of the bidding process on Monday.

Different categories were subscribed as follows:

QIBs: 3%

NIIs: 42%

Retail investors: 34%

Employees: 95%

"By looking at the financials, the company posted respectable growth in revenue from operations and net profit at 14.7% and 14.9% in FY2023 and a modest growth of 5% and 9.5%, respectively, in FY2024. On valuation parse at the upper price band of ₹463/-, the issue is asking for a market cap of ₹17029 crore, and based on FY 2025e annualized earnings and fully diluted post-IPO paid-up capital, the company is asking for a PE of 46.48x which seems fully priced by looking at the industry average of ~40- 45x. Investors should also look at IPO offers, which come with nearly 77% OFS, i.e. ₹4180 crore, with a total issue of ₹5430 crore, an area of concern for new investors. The company's advanced equipment base, proven execution capabilities and strategic market position make it a key player in infrastructure sectors. Hence, by looking at all attributes, we recommend investors to "SUBSCRIBE" to Afcons Infrastructure Ltd for a long-term perspective only," said Mehta Equities.

The global construction industry stood at approximately US$5.7 trillion as of 2023 and is expected to grow to US$7.8 trillion by 2029. Global construction industry growth will largely be driven by expanding construction investment in emerging markets.

India is projected to remain the fastest-growing major economy, with a real GDP growth rate forecasted at 6.8% for the Financial Year 2026-2027. The Indian construction industry value stood at ₹23,978.0 billion as of the Financial Year 2023 and is projected to be the fastest-growing construction market in the world, growing at a CAGR of 9.5% to 10% between the Financial Years 2023 and 2028, reaching a market size of ₹38,508.9 billion by the Financial Year 2028 (Source: Fitch Report).

The initial public offering (IPO) of Afcons Infrastructure was subscribed 23% so far on the second day of the bidding process on Monday.

The issue received bids for 1,94,93,152 shares against 8,66,19,950 shares on offer.

Different categories were subscribed as follows:

QIBs: 1%

NIIs: 32%

Retail investors: 30%

Employees: 86%

Here's a look at Afcons Infrastructure's largest projects by contract value and their contribution to order book:

C2 - Mumbai Ahmedabad High-Speed Rail (HSR) has an order book value of ₹53,227.55 million, which represents 16.77% of the total order book.

Greater Male Connectivity Project in the Maldives is valued at ₹23,884.56 million, accounting for 7.52% of the order book.

Jamrani Dam Project in Uttarakhand has a value of ₹20,219.90 million, making up 6.37% of the total.

Basania Multipurpose Dam in Madhya Pradesh is valued at ₹16,758.93 million, which constitutes 5.28% of the order book.

DC-05, Delhi MRTS Phase IV project has an order book value of ₹13,993.85 million, representing 4.41% of the total.

A look at company's financials:

• For FY24, Afcons Infra saw ROCE of 15.3%, ROE of 12.5%, EBITDA margins of 10.3% and PAT margins of 3.4%.
• Revenue grew at 10% CAGR from ₹11,019 crore in FY22 to ₹12,268 crore in FY24, while PAT rose to ₹449.7 crore, up 12% CAGR over FY22-24.

The initial public offering (IPO) of Afcons Infrastructure was subscribed 19% so far on the second day of the bidding process on Monday.

The issue received bids for 1,64,53,088 shares against 8,66,19,950 shares on offer.

Different categories were subscribed as follows:

QIBs: 1%

NIIs: 24%

Retail investors: 26%

Employees: 77%

The IPO comprises a fresh issue of ₹1,250 crore and an Offer-for-Sale (OFS) of ₹4,180 crore. The objects include the purchase of construction equipment ( ₹80 crore), long-term working capital requirements ( ₹320 crore), repayment of borrowings ( ₹600 crore) and general corporate purposes.

Marine & Industrial: This business vertical covers ports and harbour jetties, dry docks, wet basins, breakwaters, outfall and intake structures, liquefied natural gas (LNG) tanks, and material handling systems.

Surface Transport: This vertical encompasses highways and roads, interchanges, mining-related infrastructure, and railways.

Urban Infrastructure: The company’s Urban Infrastructure business vertical includes elevated and underground metro works, bridges, flyovers, and elevated corridors.

Hydro & Underground: This business vertical covers dams and barrages, tunnels (including large road tunnels), underground works, water and irrigation, and related infrastructure.

Oil & Gas: This vertical includes onshore and offshore oil and gas projects.

The initial public offering (IPO) of Afcons Infrastructure was subscribed 16% so far on the second day of the bidding process on Monday.

The issue received bids for 1,40,24,640 shares against 8,66,19,950 shares on offer.

Different categories were subscribed as follows:

QIBs: 1%

NIIs: 20%

Retail investors: 23%

Employees: 65%

Overall: 16%

Issue Dates: October 25-29

Price Band: ₹440-463

Face Value: ₹10

Total Shares Offered: 11.7 crore

Bid Lot: 32 shares

Minimum Retail Application: ₹14,816

Lead Managers: ICICI Securities, DAM Capital Advisors, Nuvama Wealth Management, Jefferies India, Nomura Financial Advisory and Securities (India) and SBI Capital Markets

“At the upper price band of ₹463, AIL is trading at a P/E ratio of 38x for FY24, which is in line with its peers. With the government’s initiatives aimed at infrastructure development, including increased budgetary allocations and the rapid pace of urbanization, AIL is strategically positioned for substantial growth. Considering its extensive experience in completing high-value and complex projects that offer better margins. Geographical diversification with operations across multiple sectors broadens their revenue base and mitigates risks. With a robust order book and a successful track record of project completion, we assign a “Subscribe” rating for medium- to long-term investment,” said Geojit Financial.

Afcons Infrastructure IPO GMP today is +24. This indicates Afcons Infrastructure share price was trading at a premium of ₹24 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Afcons Infrastructure share price is indicated at ₹487 apiece, which is 5.18% higher than the IPO price of ₹463.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

The GMP has declined from ₹60 ahead of the opening of the issue to ₹24 as of now.

Afcons Infrastructure IPO Day 2 Live: The initial public offering (IPO) of Afcons Infrastructure Ltd, the flagship infrastructure company of Shapoorji Pallonji group, opened for subscription on Friday, October 25, and enters the second day of bidding today. The public issue will remain open till Tuesday, October 29.