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

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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.