Shapoorji Pallonji Group's Afcons Infrastructure Files for ₹7,000 Crore IPO

1 Apr 2024 , 12:54 PM

Afcons Infrastructure Ltd, a construction and engineering firm backed by the diversified conglomerate Shapoorji Pallonji Group, has taken a significant stride by filing a draft red herring prospectus (DRHP) with the Securities Exchange Board of India (SEBI), aiming to raise ₹7,000 Crore through an initial public offering (IPO).

Of the total, the company plans to raise ₹1,250 Crore through a fresh issue, while the remaining ₹5,750 Crore will be raised through an offer for sale. Goswami Infratech Pvt Ltd is set to divest approximately ₹5,750 Crore worth of stake in the offer for sale, as per the DRHP.

As of December 2023, Goswami Infratech Pvt Ltd holds a 72.35% stake, while Shapoorji Pallonji and Company owns a 16.64% stake in Afcons Infrastructure Ltd.

The proceeds from the IPO will be allocated as follows: ₹150 Crore for capital expenditure, ₹350 Crore for funding long-term working capital requirements, and ₹500 Crore for repayment of a portion of outstanding borrowings and acceptance availed by the company. As of December 2023, the outstanding borrowings stood at ₹2,887.59 Crore.

According to CNBC-TV18, the IPO is anticipated to be launched at a valuation ranging between ₹19,000-20,000 Crore for Afcons Infra.

ICICI Securities, DAM Capital, Nomura, Jefferies, and SBI Capital have been appointed as the lead managers for the issue.

Afcons Infrastructure Ltd boasts a remarkable track record in executing complex Engineering, Procurement, and Construction (EPC) projects, both domestically and internationally. Over the past decade, and up to September 30, 2023, the company has successfully completed 76 projects across 15 countries, with a cumulative executed contract value of ₹52,200 Crore.

Presently, Afcons Infrastructure Ltd is engaged in 67 active projects spanning across 13 countries, with an order book value of ₹34,888 Crore. This includes a domestic order book of ₹26,093 Crore and an overseas order book of ₹8,795.32 Crore. Notably, the company has achieved the highest Return on Capital Employed (ROCE) and Return on Equity (ROE) margins among large infrastructure construction companies in India for FY23, as per the Fitch Report.

The company maintains a robust equipment base comprising a diverse range of heavy machinery and specialized equipment, enabling it to undertake and successfully execute complex projects such as the Atal Tunnel, High-Speed Railway Project, Delhi – Meerut regional rapid transit system, Delhi Metro Phase IV projects, and the second liquid cargo berth at Dahej, Gujarat for Gujarat Chemical Port Limited.

For the six-month period ending September 2023, Afcons Infrastructure Ltd reported a total income of ₹6,655.35 Crore, compared to ₹12,844 Crore in FY23. The net profit for the period stood at ₹195.13 Crore, as opposed to ₹410.86 Crore in FY23.