Afcons Infrastructure IPO analysis

Afcons Infrastructure IPO will open for subscription on October 25, 2024, and close on October 29, 2024. Below is a breakdown of the construction player's strengths, weaknesses and growth prospects to help you make an informed decision. Afcons Infrastructure IPO in a nutshell Quality : The company's three-year average ROE and ROCE were nearly 14 and 19 per cent, respectively, during FY22-24. Growth : The company's revenue and profit after tax jumped 10 and 12 per cent per annum, respectively, during FY22-24. Valuation : After listing, the stock will be valued at a P/E and P/B ratio of 38 and 4 times, respectively. Overview: Afcons Infrastructure's technical expertise along with the growing capital expenditure and development of infrastructure projects will help the company scale its business. However, the heavy dependence on government infra spending and capital intensive nature of the business can pose a threat to its growth trajectory. About Afcons Infrastructure The Shapoorji Pallonji Group company is an engineering, procurement, and construction (EPC) player with operations in India and overseas. Over its history of over 50 years, the company has successfully completed 79 projects in 17 different countries. It is currently working on over 60 projects with an order book of Rs 31,747 crore as of June 2024. Strengths of Afcons Infrastructure Strong track record: Afcons Infrastructure boasts a stellar track record of executing large-scale complex projects in a timely manner. It has undertaken many projects in verticals like railway, marine and highway projects, among others. Client stickiness: Afcons Infrastructure has maintained long-term relationships with many of its clients, working on multiple projects for them. Their association with IHI Corporation and Reliance Industries has spanned over 15 years. Weaknesses of Afcons Infrastructure Dependence on government expenditure: Around 70 per cent of the company's orders were government contracts (across India and overseas) as of June 2024. A decline in broader government capex or change in policies can impact the company's revenue stream. Afcons Infrastructure IPO details Total IPO size (Rs cr) 5430 Offer for sale (Rs cr) 4180 Fresh issue (Rs cr) 1250 Price band (Rs) 440 - 463 Subscription dates Oct 25, 28 and 29, 2024 Purpose of issue To fund capital expenditure, working capital requirements and repay debt Post-IPO M-cap (Rs cr) 17,026 Net worth (Rs cr) 4,912 Promoter holding (%) 67.2 Price/earnings ratio (P/E) 37.8 Price/book ratio (P/B) 3.5 Financial history Key financials (Rs cr) 2Y CAGR (%) 12 months ending June 2024 FY24 FY23 FY22 Revenue 9.7 13,250 13,267 12,637 11,019 EBIT