Afcons Infrastructure IPO: Business, Financials, Key Risks—All You Need To Know

Afcons Infrastructure Ltd.'s initial public offering of shares worth Rs 5,430 crore is scheduled to open for subscription on Friday. The IPO consists of a fresh issue of Rs 1,250 crore and an offer-for-sale worth Rs 4,180 crore.

The price band for the Afcons Infrastructure IPO has been set at Rs 440-463 per share. At the upper end of the price band, the company's market value is Rs 17,026 crore.

The IPO issue is set to close on Oct. 29, with the listing expected to take place on Nov. 4.

• Issue opens: Oct. 25.

• Issue closes: Oct. 29.

• Issue price: Rs 440-463 per share.

• Fresh issue: Rs 1,250 crore.

• Offer for sale: Rs 4,180 crore

• Total issue size: Rs 5,430 crore.

• Capital expenditure towards the purchase of construction equipment

• Funding long-term working capital requirements

• Prepayment or scheduled repayment of a portion of certain outstanding borrowings and acceptances by the company

• General corporate purposes

Incorporated originally in 1959, Afcons Infrastructure Ltd. is the flagship infrastructure, engineering, and construction company of the Shapoorji Pallonji group (i.e., the group’s leading engineering and construction company), a diversified Indian conglomerate, and has a legacy of over six decades.

During the period comprising the last eleven financial years and the three-month period ended June 30, 2024, the company has successfully completed 79 projects across 17 countries with a total historic executed contract value of Rs 56,305 crore. As of June 30, 2024, they have 65 active projects (i.e., ongoing projects) across 12 countries, aggregating to an order book of Rs 31,747 crore.

The company designs and executes projects across five major infrastructure business verticals:

• Marine and Industrial

• Surface Transport

• Urban Infrastructure

• Hydro and Underground

• Oil and Gas

Over the years, the company has expanded its presence globally, in particular across Asia, Africa, and the Middle East.

• The company’s business significantly depends on projects awarded by government or government-owned customers, which subjects them to a variety of risks. Such projects contributed to 69.80% of their order book as of June 30, 2024.

• The company may not be able to collect receivables due from their customers in a timely manner or at all, which may adversely affect their business, financial condition, results of operations, and cash flows. As of June 30, 2024, their total trade receivables (including interest on arbitration awards) amounted to ₹39,746.10 million.

• The company’s business is capital intensive. If they experience insufficient cash flows or are unable to access suitable financing to meet working capital requirements and loan repayment obligations, their business, financial condition, and results of operations could be adversely affected.

• The Company If they fail to qualify for or win new contracts from project owners, their business, financial condition, results of operations, prospects, and cash flows could be adversely affected.