The Afcons Infrastructure Limited IPO, launched on October 25, 2024, is open for applications until October 29, 2024, leaving just two days for prospective investors to apply.
As of Day 2, the IPO has seen a subdued response from the market, with subscription rates pointing towards caution among investors despite endorsements from multiple brokerages, including Anand Rathi, Geojit Securities, KR Choksey, and Mehta Equities, who have issued a “subscribe” recommendation.
GMP Movement and Market Sentiment
Today’s Grey Market Premium (GMP) for Afcons Infrastructure is at around Rs 18. The GMP has witnessed a significant dip from the weekend’s Rs 59 per share.
Market analysts attribute this downturn to weak sentiment in the secondary market, particularly as the Nifty 50 has faced consecutive losses. However, the positive GMP today contrasts with the neutral reception at launch, suggesting some lingering interest despite the broader market slowdown.
Current Subscription Status
As of 10:51 AM on the second day, the IPO had a subscription rate of 0.17 times. The retail portion had seen 0.23 times subscription, with Non-Institutional Investors (NII) and Qualified Institutional Buyers (QIB) segments at 0.20 times and 0.01 times, respectively.
To be sure, the Afcons Infrastructure IPO is a book-built issue totaling Rs 5,430 crore. It includes a fresh issue valued at Rs 1,250 crore and an offer for sale (OFS) amounting to Rs 4,180 crore. The cap price is set at a minimum of 105% of the floor price and will not exceed 120% of the floor price.
Brokerages maintain Buy Tag
KR Choksey Securities has recommended ‘subscribe’ citing Afcons’ extensive expertise in executing complex engineering and construction projects, especially in marine, urban infrastructure, and hydro sectors.
The brokerage pointed out factors such as the company’s strategic expansion in markets like Africa and the Middle East, as well as its competitive positioning due to strong client relationships and advanced capabilities behind its ‘subscribe’ rating.
Similarly, Mehta Equities has issued a ‘buy’ rating. The broker noted the company’s revenue and net profit growth of 14.7% and 14.9%, respectively, in FY2023, and moderate growth in FY2024. It assesses Afcons’ valuation at the upper price band of Rs 463 as fully priced with a price-to-earnings (PE) ratio of 46.48x, aligning with the industry average. However, it also advised a long-term perspective due to the high Offer for Sale (OFS) component—77% of the total Rs 5430 crore issue, as reported by Mint.
The allotment for the Afcons Infrastructure IPO is anticipated to be finalized on Wednesday, October 30, 2024. The stock is expected to be listed on the BSE and NSE, with a tentative listing date set for Monday, November 4, 2024.
The company’s promoters include Goswami Infratech Private Limited, Shapoorji Pallonji and Company Private Limited, and Floreat Investments Private Limited, holding a combined 99.48% stake in the company pre-issue.
ICICI Securities Limited, Dam Capital Advisors Ltd (formerly IDFC Securities Ltd), Jefferies India Private Limited, Nomura Financial Advisory and Securities (India) Pvt Ltd, Nuvama Wealth Management Limited, and SBI Capital Markets Limited serve as the book-running lead managers for the Afcons Infrastructure IPO, with Link Intime India Private Ltd acting as the registrar for the offering.