Afcons Infrastructure IPO GMP Down By Nearly Half After Tepid Investor Response On Day 1

The Rs 5,430-crore initial public offering launched by Afcons Infrastructure Ltd. was subscribed only 10% on its first day on Friday. As the IPO drew a tepid response, the grey market premium on the stock slipped to nearly half, according to reports.

The GMP on the stock dwindled to Rs 33, as shared by InvestorGain platform. This was down 45% as compared to the GMP of Rs 60 reported on Oct. 24, a day before the IPO was opened for subscription.

The current grey market trends indicate that Afcons Infrastructure may end up making a modest debut at the stock market. The estimated listing price—the sum of GMP and the upper end of the IPO price band—stands at Rs 496.

If the shares list at Rs 496 apiece, it would mark a premium of 7.1% as against the upper IPO price of Rs 463 per share. However, GMP is not an official price quote for the stock and is based on speculation.

The IPO was subscribed only 0.1 times on the first day, as investors cumulatively placed bids for 85.9 lakh shares as against 8.66 crore shares on offer, NSE data showed.

The subscription was led by retail investors, booking 60.5 lakh shares or 0.13 times their allotted portion of 4.29 crore shares. Non-institutional investors booked 20.49 lakh shares or 0.11 times their reserve portion of 1.84 crore shares.

Qualified institutional buyers booked 0.1 times their allotted portion, as they placed bids for 2.5 lakh out of the 2.45 crore shares reserved for them.

The three-day subscription window of Afcons Infrastructure's public issue, which has a price band of Rs 440-463 per share, will close on Oct. 29. While the allotment of shares is expected on Oct. 30, the listing date is yet to be confirmed.

The lacklustre response to the IPO also comes amid the correction phase seen in the Indian markets, with both NSE Nifty 50 and BSE Sensex slipping by around 8% from their recent highs.

Notably, Afcons Infrastructure's IPO comprises a fresh issue of Rs 1,250 crore and an offer-for-sale worth Rs 4,180 crore.

The company intends to use the fresh issue proceeds for capital expenditure towards the purchase of construction equipment, and funding long-term working capital requirements.

A part of the proceeds will also be used for prepayment or scheduled repayment of a portion of certain outstanding borrowings, as per the IPO draft papers.

Afcons Infrastructure, which is the flagship infrastructure, engineering, and construction company of the Shapoorji Pallonji group, had logged a 9.4% year-on-year jump in net profit to Rs 449.7 crore in fiscal 2024. The revenue from operations had increased by 4% to Rs 13,267.5 crore.