Afcons Infrastructure is set to make its market debut on November 4, but the outlook has become more cautious.
After a successful allotment on October 31, following its subscription phase from October 25 to October 29, the IPO has raised some concerns as its grey market premium (GMP) flipped negative.
The GMP has dropped to a Rs 3 discount, putting the estimated listing price at Rs 460 per share, slightly under the upper end of the IPO price band of Rs 463.
The IPO received a mixed response from investors. It was subscribed 2.63 times overall, with non-institutional investors (NIIs) leading the enthusiasm at 5.05 times. Qualified institutional buyers (QIBs) followed at 3.79 times, while retail investors subscribed at 94%, signaling solid but not overwhelming interest. The employee segment also saw a decent subscription, oversubscribed by 1.67 times. The initial two days of bidding were sluggish, hitting just 10% on the first day and climbing to 36% on the second.
Afcons raised Rs 1,621 crore from anchor investors, showing early confidence in the offering. The IPO allocation was divided with 50% reserved for QIBs, 15% for NIIs, and 35% for retail investors. Employees received a discount of Rs 44 per share, with shares priced between Rs 440 and Rs 463, and a lot size set at 32 shares.
The grey market has been volatile, with Afcons’ GMP fluctuating from a low of Rs -3 to a high of Rs 225 over the last 34 sessions. Market experts suggest that the current negative sentiment, albeit modest, might pressure the stock’s valuation during the initial hours of trading.
The IPO features a fresh issuance of Rs 1,250 crore, alongside an offer-for-sale worth Rs 4,180 crore. Major stakeholders, including Goswami Infratech, Shapoorji Pallonji, Floreat Investments, Hermes Commerce, and Renaissance Commerce, are offloading shares. Collectively, these shareholders hold 99% of Afcons, leaving just 1% for public investors.
Afcons plans to use Rs 80 crore of the fresh proceeds to acquire construction equipment, Rs 320 crore for long-term working capital, and Rs 600 crore for debt repayment. The remainder will go toward general corporate purposes, aiming to strengthen the company’s operational and financial position.
Investors will be watching Afcons’ listing closely, especially given the mixed signals from the grey market. The company's strategic focus on debt reduction and operational enhancement could be crucial as it navigates its debut.