Shapoorji Pallonji Group’s flagship firm, Afcons Infrastructure, files DRHP to raise Rs 7,000 crore via IPO

Shapoorji Pallonji Group’s flagship infrastructure engineering and Construction firm, Afcons Infrastructure Limited (AIL), has filed its draft red herring prospectus (DRHP) with the market regulator, Securities and Exchange Board of India (SEBI), to raise funds through an initial public offering (IPO).

According to the draft papers, the IPO, with a face value of Rs 10 per equity share, is a mix of fresh issue of shares of Rs 1,250 crore and an offer for sale of up to Rs 5,750 crore by Goswami Infratech Private Limited.

The offer includes a reservation for subscriptions by eligible employees. As per the market sources, it is the largest infra IPO in a decade.

The company, in consultation with the book-running lead managers, may consider undertaking a further issue of equity shares through a preferential issue or any other method for a cash consideration aggregating up to Rs 250 crore as a “pre-IPO placement”. If such placement is completed, the fresh issue size will be reduced.

The offer is being made through the book-building process, wherein not more than 50% of the net offer shall be available for allocation on a proportionate basis to qualified institutional buyers, not less than 15% of the net offer shall be available for allocation to non-institutional bidders, and not less than 35% of the net offer shall be available for allocation to retail individual bidders.

Afcons Infrastructure is an Indian conglomerate with a rich history spanning over six decades. The company has a proven track record of successfully delivering a wide range of complex and challenging engineering, procurement, and construction (EPC) projects both domestically and internationally.

The company has a strong international presence across various infrastructure sectors, as highlighted in the 2023 ENR rankings. Afcons ranks among the top international contractors globally in marine and port facilities, bridges, transportation, and transmission line segments based on international revenue for the financial year 2023, according to the Fitch Report.

The company’s global footprint extends across Asia, Africa, and the Middle East, where it has undertaken groundbreaking infrastructure projects.

Some notable completed projects include the Chenab Bridge in Jammu & Kashmir and the Atal Tunnel in Himachal Pradesh. Ongoing projects like the Kolkata Metro and the Male to Thilafushi Link Project in the Maldives demonstrate Afcons’ continued commitment to innovation and excellence in the infrastructure sector.

In terms of listed industry peers, Afcons compares itself with Larsen & Toubro Limited (L&T), KEC International Limited (KEC), Kalpataru Project International Limited (KPIL), and Dilip Buildcon Limited (DBL).

AIL’s order book has increased at a CAGR of 7.6% from Rs 26,248.46 crore in the financial year 2021 to Rs 30,405.77 crore in the financial year 2023. As of September 30, 2023, it stood at Rs 34,888.39 crore.

Afcons’ restated consolidated revenue from operations during the fiscal year 2023 increased 14.69% to Rs 12,637.38 crore from Rs 11,018.97 crore in the previous year, primarily due to an increase in construction contract revenue, driven by an increase in business in its Urban Infrastructure and Hydro and Underground business verticals, both in India and overseas. Profit after tax grew 14.89% from Rs 357.60 crore for the financial year 2022 to Rs 410.86 crore for the financial year 2023.

For the six months ended September 30, 2023, revenue from operations stood at Rs 6,505.39 crore, and profit after tax stood at Rs 195.13 crore.

According to the Fitch Report, the Indian infrastructure industry has grown at a compounded annual growth rate of 11.4%, from Rs 5.04 trillion in the financial year 2018 to Rs 7.75 trillion in the financial year 2022. Further, Fitch estimates India’s infrastructure industry to grow at a compounded annual growth rate of 9.9% from Rs 8.56 trillion in the Financial Year 2023 to Rs 13.72 trillion in the Financial Year 2028.

ICICI Securities Limited, DAM Capital Advisors Limited, Jefferies India Private Limited, Nomura Financial Advisory and Securities (India) Private Limited, Nuvama Wealth Management Limited, and SBI Capital Markets Limited are the book-running lead managers, and Link Intime India Private Limited is the registrar of the issue.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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