Afcons Infrastructure’s initial public offering (IPO) attracted a muted response from investors during the second day of the bidding process. The show, which opened for bidding on Friday, October 25, initially had a quiet start and was 10 percent booked on day one.

Afcons Infra is selling its shares in the price range of Rs 440 to 463 apiece. Investors can apply for a minimum of 32 stocks and its multiples thereafter. It is looking to raise Rs 5,430 crore through an IPO, which includes a fresh sale of 1,250 crore shares and an offer for sale (OFS) of up to Rs 4,180 crore.

According to BSE data, investors placed bids for 8,66,19,950 shares, or 25 per cent, against the 2,20,20,256 shares offered for subscription on Monday, October 28, at 3 p.m. The one-day auction for the show will end on Tuesday, October 29.

The allocation intended for individual investors was subscribed at 32 percent, while the portion reserved for non-institutional investors (INI) saw a subscription of 38 percent. The allowance for employees was recorded at 0.91 percent. However, the quota reserved for Qualified Institutional Bidders (QIB) saw only 3 percent bids for their allocations at the same time.

Mumbai-based Afcons Infrastructure, incorporated in 1959, is an infrastructure engineering and construction company of the Shapoorji Pallonji Group, with a heritage spanning over six decades. It has verticals like marine and industrial projects; surface transportation projects; urban infrastructure projects; Hydroelectric and underground projects; and oil and gas projects.

The gray market premium (GMP) for Afcons Infrastructure is steadily declining amid market volatility. At last report, the company was enjoying a premium of Rs 25-30 in the unofficial market, which suggests a listing of only 5-6 per cent for investors. GMP stood at Rs 75 earlier.

Brokerages mostly take a positive view on the matter and suggest subscribing for long term, due to their strong financial balance sheet, large order book in India and globally and management experience . However, fully valued valuations and the capital intensive nature of the business are major concerns.

Afcons Infrastructure fetched Rs 1,621.5 crore from 80 anchor investors by alloting 3,50,21,597 shares at Rs 463 each. Afcons reported a net profit of Rs 91.59 crore with a turnover of Rs 3,213.47 crore for the quarter ended June 30, 2024. It recorded a net profit of Rs 449.76 crore with a turnover of business of Rs 13,646.88 crore for the financial year ended March 31. , 2024.

The Afcons Infrastructure IPO provides investors with the opportunity to invest in a flagship construction company of the Shapoorji Pallonji Group, backed by a strong track record in executing large and complex projects. With a diverse portfolio spanning marine, transportation, bridges and urban infrastructure, Afcons’ ability to complete projects ahead of schedule highlights its operational excellence, Mehta Equities said.

“Given the company’s advanced equipment base, proven execution capabilities and strategic market position, it is a key player in the infrastructure sectors. Therefore, looking at all attributes, we recommend investors to “subscribe” to Afcons Infrastructure Ltd for a long-term perspective only,” he said. said.

Afcons Infra has reserved shares worth Rs 25 crore for eligible employees of the company, who will get a discount of Rs 44 per share. Of the balance of the issue, 50 percent of the net offering is for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) hold 15 percent of the allocation. Retail investors will get the remaining 35 percent.

Afcons Infra is trading at a P/E ratio of 38 times for FY24, which is in line with its peers. With government initiatives aimed at infrastructure development, including increased budgetary allocations and rapid pace of urbanization, AIL is strategically positioned for substantial growth, Geojit Financial Services said.

“Given its extensive experience in delivering complex, high-value projects that offer better margins. Geographic diversification with operations in multiple sectors broadens their revenue base and mitigates risks. With a strong order book and a successful track record of project completion, we award a “subscribe” for medium to long term investments,” he said.

ICICI Securities, DAM Capital Advisors, Jefferies India, Nuvama Wealth Management, Nomura Financial Advisory and Securities (India) and SBI Capital Markets are the lead managers of the Afcons Infra IPO, while Link Intime India is the registrar of the show.