Afcons Infrastructure IPO: Shapoorji Pallonji Group Company Gets SEBI Nod For Rs 7,000 Crore Public Issue

Afcons Infrastructure Limited (AIL), the flagship engineering and construction company of the Shapoorji Pallonji Group, has received the green light from the Securities and Exchange Board of India (SEBI) to launch its initial public offering (IPO). This move is set to raise Rs 7,000 crore.

Afcons, known for its robust presence across multiple infrastructure sectors such as marine, surface transport, urban infrastructure, hydro, underground projects, and oil and gas, is positioning itself to capitalize on India's booming infrastructure development needs. With SEBI's approval, the company is now poised to take the next big step.

IPO Structure and Allocation of Proceeds

The upcoming 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 Goswami Infratech Private Limited, a key stakeholder in Afcons. The face value of each equity share will be Rs 10, which is standard for public offerings in India.

Of the Rs 1,250 crore raised through the fresh issue, the company has detailed plans for its allocation. A significant chunk of Rs 150 crore will go towards capital expenditures, specifically the purchase of cutting-edge construction equipment. Another Rs 350 crore has been earmarked for long-term working capital requirements, ensuring that the company has sufficient liquidity to meet operational demands. Additionally, Rs 500 crore will be allocated towards prepaying or repaying outstanding borrowings, helping the company reduce its debt burden. The remaining funds will be used for general corporate purposes, allowing Afcons the flexibility to seize new opportunities and enhance its operational efficiency.

This carefully structured financial plan reflects Afcons' strategic vision of ensuring sustained growth and operational excellence. By addressing its capital needs and debt reduction, the company aims to create a stronger balance sheet.

Growth Trajectory

Afcons has consistently demonstrated solid growth across various parameters, with its order book serving as a testament to the company's expanding footprint. Over the past few years, the company's order book has increased at a compound annual growth rate (CAGR) of 7.6%, growing from Rs 26,248.46 crore in 2021 to Rs 34,888.39 crore as of September 2023.

For the fiscal year 2023, the company reported a 14.69% increase in its revenue from operations, which rose to Rs 12,637.38 crore, up from Rs 11,018.97 crore in 2022. Profit after tax also saw a corresponding jump, increasing by 14.89% to Rs 410.86 crore, compared to Rs 357.60 crore in the previous financial year. For the six months ending September 30, 2023, Afcons reported revenue of Rs 6,505.39 crore, with a profit after tax of Rs 195.13 crore.

ICICI Securities Limited, DAM Capital Advisors Limited, Jefferies India Private Limited, Nomura Financial Advisory and Securities (India) Private Limited, Nuvama Wealth Management Limited, and SBI Capital Markets Limited are the book-running lead managers for the IPO. Their involvement lends credibility and ensures robust support for the public offering. Furthermore, Link Intime India Private Limited, a reputable registrar, has been appointed to manage the technical aspects of the share issuance.

As Afcons Infrastructure Limited prepares for its Rs 7,000 crore IPO, all eyes are on its future prospects in the infrastructure sector. With a well-diversified portfolio and a proven track record of project execution, the company is poised for long-term success. The strategic use of IPO proceeds will further strengthen its balance sheet, reduce debt, and enhance its operational capabilities, making Afcons an attractive investment opportunity for both institutional and retail investors.