Afcons Infrastructure IPO: Shapoorji Pallonji Group’s Construction Giant Gears Up for Mega Listing

Afcons Infrastructure Limited, the flagship construction company of the Shapoorji Pallonji Group, has received the green light from the Securities and Exchange Board of India (SEBI) to launch its highly anticipated initial public offering (IPO). The company, which boasts over six decades of experience in executing complex infrastructure projects both in India and internationally, is set to raise a massive Rs 7,000 crore through its public debut.

The upcoming Afcons Infrastructure IPO will consist of a fresh issue of shares amounting to Rs 1,250 crore and an offer for sale (OFS) of up to Rs 5,750 crore by the promoter Goswami Infratech Private Limited. The company plans to utilize the fresh issue proceeds for capital expenditure, working capital requirements, debt repayment, and general corporate purposes.

Afcons Infrastructure: A Powerhouse in the Construction Industry

Afcons Infrastructure has established itself as one of India’s largest international infrastructure companies, ranking 6th globally in Marine and Port facilities and 21st globally in the Bridges sector, according to the 2023 ENR (Engineering News-Record, US) Top International Contractors rankings. The company has successfully completed 76 projects across 15 countries over the last ten financial years up to September 30, 2023, with a historic executed contract value of Rs 522.20 billion.

As of September 30, 2023, Afcons is managing 67 active projects across 13 countries, with an order book worth Rs 348.88 billion. Notable projects undertaken by the company include the Chenab Bridge, the world’s tallest single-arch railway bridge, and the Atal Tunnel, the world’s longest highway tunnel above 3,000 meters.

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Industry Outlook: Promising Growth Prospects

The Indian infrastructure industry has witnessed robust growth in recent years, expanding at a CAGR of 11.4% from Rs 5,041.1 billion in FY 2018 to Rs 7,750.6 billion in FY 2022. The sector is poised for further expansion, with a projected CAGR of 9.9%, reaching Rs 13,719.3 billion by FY 2028 from Rs 8,560.5 billion in FY 2023.

Afcons Infrastructure IPO Details

The exact dates for the Afcons Infrastructure IPO are yet to be announced, but the company has received SEBI’s observation letter, paving the way for the launch of the public issue. The price band and lot size for the IPO are also yet to be determined.

According to the draft red herring prospectus (DRHP) filed by the company, the IPO will be a mix of fresh issue and offer for sale. The fresh issue component will account for Rs 1,250 crore, while the OFS will comprise up to Rs 5,750 crore of shares sold by the promoter.

Strengths and Risks

Afcons Infrastructure boasts several strengths, including its global recognition, diverse order book, and consistent performance. The company has won the prestigious MIKE (Most Innovative Knowledge Enterprise) award from 2018 to 2023 at both the India and Global levels, reflecting its commitment to excellence in project management and knowledge practices.

However, the company also faces certain risks, such as bidding risks, heavy reliance on government contracts, capital intensity, and high receivable delays. These factors could impact the company‘s financial performance and growth prospects.

Upcoming IPOs in the Infrastructure Sector

Afcons Infrastructure is not the only company in the infrastructure sector gearing up for an IPO. Four other companies, including Godavari Biorefineries, Shivalik Engineering Industries, Quadrant Future Tek, and Enviro Infra Engineers, have also received SEBI’s observation letter to launch their respective public issues.

The upcoming IPOs in the infrastructure sector are expected to attract significant investor interest, given the industry‘s growth potential and the strong track record of the companies involved.

Disclaimer: The information given in this article is from investment experts and brokerage companies, they do not represent Local Haryana. Before taking any investment related decision, you must consult a certified expert.