AVP Infracon IPO: Overview, Key Details, Financials, Strengths, and Weaknesses
Are you bullish on India’s infrastructure story? Today, we’ll be exploring a construction company’s IPO. Let’s understand its overview, clientele, and SWOT analysis.
Overview
AVP Infracon Limited, earlier known as AVP Constructions Private Limited, was founded in 2009, and the founder was determined to make it India’s leading construction company. The company specializes in the construction of road projects and engineering, procurement, and construction methods.
The company has partnered strategically as a joint venture with M/s Jawahar Constructions and M/s CDR & Co. Constructions. This will increase their efficiency in completing projects and strengthening their order book.
Their projects generally include expressways, national highways, flyovers, bridges, irrigation projects, and urban development projects. As of December 2023, they have completed more than 40 projects, and the value of those projects is estimated to be around 313.21 crores.
The company bids for projects mainly in Tamil Nadu and has its head office in Chennai.
Clientele
Their major clients include Greater Chennai Corporation, the National Highway Authority of India, the Tamil Nadu Public Works Department, the Tamil Nadu Highways Department, and the Ministry of Road Transport and Highways.
Promoters
The company’s promoters are Mr. B Venkateshwarlu and Mr. D Prasanna. They own about 86.5% of the business. The promoter’s pre-issue stake in the company is 86.5%, and their post-issue stake is expected to be 62.33%.
Details of the Issue
AVP Infracon is planning an initial public offering (IPO) to sell 69.79 lakh shares and raise INR 52.34 crores. This is an entirely fresh issue. The initial public offering (IPO) price range is 71 to 75 INR per share. A minimum lot size of 1600 shares has been decided.
Key Details
| Face Value of Share | INR 10 Rs |
| Price Band | INR 71 to INR 75 per share |
| Market Lot | 1600 Shares |
| Total Fresh Issue Size | 52.34 Crores |
| Total Number of Shares | 69.79 Lakh shares |
Timeline
| IPO Open Date | 13th March 2024 |
| IPO Close Date | 15th March 2024 |
| Finalization of Allotment | 18th March 2024 |
| Initiation of Refund & Credit of shares into Demat account | 19th March 2024 |
| Listing Date | 20th March 2024 |
Allotment Size
| Applicant | Market Lot | Share | Amount (INR) |
| Retailer (Min) | 1 | 1600 | INR 120000 |
| Retailer (Max) | 1 | 1600 | INR 120000 |
| High Net Worth Individual (Min) | 2 | 3200 | INR 240000 |
Reservation
| Investor Category | Shares Offered | % Offered |
| Anchor Investor Shares Offered | 1870400 | 26.8 |
| Market Maker Shares Offered | 731200 | 10.48 |
| QIB Shares Offered | 1248000 | 17.88 |
| NII Shares | 939200 | 13.46 |
| Retail Shares Offered | 2190400 | 31.38 |
| Total Shares Offered | 6979200 | 100 |
Objective
The proceeds from this issue will be utilized to purchase equipment, meet working capital requirements, and general corporate purposes.
Financial Highlights
Balance Sheet
| Particulars | 31st March 2023 | 31st March 2022 | 31st March 2021 |
| Non-Current Asset | 3314.95 | 1210.4683 | 1165.3077 |
| Current Asset | 11268.36 | 4681.8282 | 3752.0499 |
| Total Asset | 14583.33 | 5892.2965 | 4917.3579 |
| Total Shareholder’s Fund | 2496.14 | 1046.6482 | 509.7684 |
| Long Term Liability | 3228.1 | 2002.7479 | 1769.1512 |
| Current Liability | 5972.65 | 2842.9004 | 2638.4384 |
Income Statement
| Particulars | 31st March 2023 | 31st March 2022 | 31st March 2021 |
| Revenue from Operations | 11498.08 | 7094.9034 | 5080.8052 |
| Total Income | 11550.09 | 7174.2027 | 6362.1746 |
| Total Expenses | 10027.17 | 6785.8604 | 6120.3692 |
| Profit before tax | 1522.92 | 388.3423 | 241.8054 |
| Profit after tax | 1151.79 | 276.8800 | 170.0461 |
Cash Flow Statement
| Particulars | 31st March 2023 |
| Cash flow from operating activities | 1339.85 |
| Cash flow from investing activities | (1133.35) |
| Cash flow from financing activities | 300.16 |
Key Performance Indicators (KPIs)
| Indicators | Values (2023) |
| Return on Equity (ROE) | 25.05% |
| Return on Capital Employed (ROCE) | 22.62% |
| Debt-to-Equity Ratio | 1.96 |
| Return on Net Worth | 25.05% |
| Price to Book Value (P/BV) | 3.96 |
| Profit after tax margin | 11.91 |
Strengths
1. The company has a great clientele, which also includes government agencies.
2. The company has a solid revenue track record, as evidenced by the about 62% YoY increase in sales.
3. The management has managed construction projects for more than 15 years, and thanks to their skills, they have become recognized as leaders in the field.
Weaknesses
1. Since all of the company’s revenue originates from Tamil Nadu, any unfavorable government action could negatively impact business operations.
2. Any delay in the project would increase the operating cost, impacting their profit margins.
3. A significant increase in the company’s current liability can be seen in FY 2023, which has increased by almost 110% on a YoY basis.
Growth Potential
The development of Indian roadways and highways is expected to have a cagr of 36% between 2016 to 2025. This is because the government focuses on infrastructural development by providing world-class roadways and highways in India. Since AVP Infracon has been a part of the industry for a considerable time, they have a huge opportunity.
Conclusion
Infracon is a small and medium enterprise-scale company that is a dominant player in Tamil Nadu. The company’s profitability is increasing on a strong YoY basis with their revenue. However, it is important to know that before investing, you must understand the benefits and risks of investing in SME companies.
Frequently Asked Questions (FAQs)
Q1. What does AVP Infracon do?
Ans. AVP Infracon is a Tamil Nadu-based construction company engaged in developing roads, bridges, flyovers, etc.
Q2. Did AVP infracon give any listing gains?
Ans. AVP Infracon gave a total of 5.33% of listing gains as it got listed at 79, more than the issue price of 75.
Q3. When was AVP Infracon IPO accepting applications?
Ans. AVP Infracon’s IPO was open from 13th March to 15th March 2023, and an investor within these 3 days could apply for it.
Q4. What was the minimum amount required to apply for an AVP Infracon IPO?
Ans. To apply for one bid for the AVP Infracon IPO, a retail investor needs 1,20,000 INR.
Q5. What does the company’s income statement say about the company?
Ans. The topline figures have seen massive growth in the past 2 years, and expenses did not increase similarly. Hence, this led to a substantial increase in the company’s profitability.
Disclaimer: The securities, funds, and strategies mentioned in this blog are purely for informational purposes and are not recommendations.
