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Afcons Infrastructure Limited, a prominent player in the global construction industry, is widely recognized for its expertise in executing large-scale and complex infrastructure projects. Established in 1959, the company has evolved into a multinational entity under the Shapoorji Pallonji Group, specializing in various sectors such as marine, transportation, urban infrastructure, and oil and gas

Objects and Details of the Issue:

* Total issue of ~Rs. 5,430 Cr (at upper price band) consists of fresh issue worth Rs. 1,250 Cr and offers for sale worth Rs. 4180 Cr.

* Fresh issue proceeds shall be used towards: (i) Capital expenditure towards purchase of construction equipment’s amounting to 80 Cr; (ii) Funding long term working capital requirements amounting to 320 Cr; (iii) To utilize Rs. 600 Cr for the repayment of company borrowings.

Investment Rationale:

* Strong Track Record of Timely Execution of Large-Scale, Complex and High-Value Projects

* Afcons asset Right approach

* Robust Financial Metrics

Valuation and Recommendation:-

Afcons Infrastructure Limited, despite its strong capabilities in managing large and complex projects, has exhibited a relatively modest revenue growth rate of 10% CAGR from FY22 to FY24. In contrast, its larger peer, L&T, has achieved significantly faster growth during the same period further Afcons generates higher asset turns than its peers resulting in superior ROCE. Although Afcons has a decent order book to sales ratio of 2.4x, the order book is executable over many years into the future. Afcons is currently offered at a 15% premium over the average price-to-earnings (P/E) ratio of its peers. This premium appears unwarranted given its lower growth trajectory compared to competitors. Therefore we rate the IPO as ‘NEUTRAL’

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SEBI Registration number is INH000001766