Afcons IPO: Your ticket to India’s infrastructure boom?
Subscribe to enjoy similar stories. Afcons Infrastructure Ltd, the flagship company of the Shapoorji Pallonji Group specializing in infrastructure, engineering, and construction, is set to launch its much-anticipated initial public offering (IPO) on Friday. Afcons, known for executing large-scale engineering, procurement, and construction (EPC) projects both domestically and internationally, aims to raise ₹5,430 crore, including a fresh issue of ₹1,250 crore, with shares priced between ₹440 and ₹463 apiece.
The issue will close next Tuesday. With a six-decade legacy of delivering complex infrastructure projects, Afcons’ IPO presents a compelling opportunity for investors seeking exposure to India’s burgeoning infrastructure sector. But let’s examine the company’s strengths and challenges to assess its potential.
Afcons plans to use the IPO proceeds to enhance its financial position. It will allocate ₹600 crore to repaying high-cost loans, ₹320 crore to supporting working capital, and ₹80 crore for capital expenditure. These measures aim to reduce debt and boost operational efficiency.
Afcons has cemented its position as a dominant player in the infrastructure sector, consistently outperforming its peers on key financial metrics. Over the past three fiscal years, the company has maintained healthy operating margins and an impressive return on capital employed (ROCE). This has propelled Afcons to the forefront of the industry, surpassing competitors such as KEC International Ltd, Kalpataru Project International Ltd, and Dilip Buildcon Ltd.
However, industry experts advice some caution. Deven Choksey, managing director of KRChoksey Financial Services Pvt. Ltd, said the “higher ROCE may be a short-lived phenomena.
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