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Afcons Infrastructure Limited IPO: Should you invest?

Afcons Infrastructure Limited IPO: Should you invest?

Afcons-Infrastructure-IPO

The Afcons Infrastructure IPO is a public offering of 11.73 crore shares, consisting of a fresh issue of 2.7 crore shares and an offer for sale of 9.03 crore shares. The total issue size is Rs 5,430 crores. The IPO opens for subscription on October 25, 2024 and closes on October 29, 2024. Are you wondering whether to invest? Take a look at all you need to know about this IPO below:


Company Overview

Afcons Infrastructure Limited is a leading infrastructure engineering company with a strong global presence. The company has a diverse portfolio of completed and ongoing projects across various sectors, including marine and industrial, surface transport, urban infrastructure, hydro and underground, and oil and gas.


IPO Details 

Parameter  Details 
IPO Dates  October 25-29, 2024 
Face Value  ₹10 per share 
Price Band  ₹440-₹463 per share 
Lot Size  32 Shares 
Total Issue Size  ₹5,430 crores 
Listing Exchange  BSE, NSE 
Promoters  Goswami Infratech Private Limited, Shapoorji Pallonji and Company Private Limited, and Floreat Investments Private Limited 

Objective of the issue

This is a completely fresh issue of shares and not an offer for sale, unlike most IPOs that have hit the market lately.

The company will use the proceeds from the IPO as follows:

For the purchase of construction equipment (Capital expenditure)

Funding long-term working capital requirements

Prepayment or scheduled repayment of a portion of certain outstanding borrowings and acceptances availed by the Company

General corporate purpose


Key Strengths of Afcons Infrastructure

Strong Global Presence: The company has successfully executed projects in 15 countries, showcasing its expertise and capabilities.

Diverse Portfolio: Afcons Infrastructure offers a wide range of infrastructure solutions, catering to various sectors.

Track Record of Success: The company has a proven track record of completing complex and challenging projects, including the Chenab Bridge and the Atal Tunnel.

Innovation and Excellence: Afcons Infrastructure is recognized for its commitment to innovation and has won prestigious awards for its knowledge management practices.


Potential Risks

Bid Preparation Costs: The company invests significant resources in bidding for projects, which may not always result in successful contracts.

Foreign Exchange and Interest Rate Fluctuations: Changes in foreign exchange rates and interest rates could impact on the company’s financial performance.

Government and State-Owned Entity Projects: Dependence on government and state-owned entities can expose the company to risks associated with political changes and administrative delays.

Competition: The infrastructure sector is highly competitive, with several established players vying for projects.


Financial Performance (in crores) 

Period Ended  31 Mar 2024  31 Mar 2023  31 Mar 2022 
Assets  1,62,33.64  1,43,01.25  1,29,73.76 
Revenue  1,36,46.87  1,28,44.09  1,12,69.55 
Profit After Tax  449.74  410.86  357.61 

Should You Invest?

The decision to invest in the Afcons Infrastructure IPO depends on your individual investment goals and risk tolerance. While the company offers several attractive features, it’s essential to carefully consider the potential risks and conduct thorough due diligence before making an investment.


Key Factors to Consider

Long-Term Outlook: Assess the company’s growth potential in the infrastructure sector.

Risk Tolerance: Evaluate your comfort level with the inherent risks associated with investing in IPOs.

Investment Goals: Determine if this IPO aligns with your overall investment objectives.


Conclusion

Afcons Infrastructure Limited’s IPO presents an opportunity for investors to participate in the growth of a leading infrastructure engineering company. However, it’s crucial to conduct thorough research and consider the associated risks before making an investment decision.

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