Afcons Infra IPO GMP turns negative; here's analyst-recommended listing day strategy

Afcons plans to utilise Rs 80 crore from the fresh issue proceeds to buy construction equipment.

Afcons Infrastructure garnered healthy response from the participants during its three-day subscription period to conclude its initial share sale with 2.63 times subscription.

The retail portion was not fully subscribed and ended with 94 percent subscription even as the pricing is fair compared to its peers, justifying its growth potential. The undersubscription of retail portion of Afcons meant everyone would get their demanded shares at cut-off price.

Shapoorji Pallonji Group's flagship infrastructure engineering and construction firm has a significant presence in the Indian and overseas markets. The price band for the issue was fixed at Rs 440-463 per share.

The low subscription rate can be attributed to the weak listing gains the participants expect from the issue. Currently, the issue's GMP is trading at a negative territory.

Afcons Infra IPO allotment status: All retail bidders likely to get shares; here's a detailed guide to check details online

According to data fetched from Investorgain, the shares of the company are trading at -3 in the grey market, indicating a discount listing of around Rs 460 as against the offer price of Rs 463 per share.

Prashanth Tapse, Sr VP Research Analyst at Mehta Equities Ltd believes there is a high possibility of negative listing, which can be an opportunity for long term investors to accumulate more on day one of listing.

He noted that the long term rationale to invest and hold is justified mainly on the back of a healthy order book supporting its future growth, strong track record of executing complex, challenging and unique EPC projects, both within India and internationally, and stable financial performance over the years along with a capable efficient management team to take the company to newer heights.

"Considering all the parameters lower than expected subscription figures and parent credit weightage followed by ongoing subdued market mood, Listing would be flat 5% + or – to its issue price," he added.

The Rs 5,430-crore initial share sale of Afcons Infrastructure faced challenges during the first two days of bidding but sailed through on the final day of bidding, mainly supported by NII category investors who made 5.05x bids.

Amid likelihood of tepid gains for the infra major on its listing day, Sagar Shetty, Research Analyst at StoxBox said the muted gains are likely an effect of weak market sentiment.

"By capitalising on its strength in design, engineering and management and leveraging its robust network and strategic collaboration, the company is set to achieve sustainable growth. Owing to the company’s strong presence in the market, strong parentage, a wide array of solutions and a higher concentration of government projects, the company is well-positioned to benefit from the economic tailwinds," he added.

The shares of the company will be listed on the both NSE and BSE on Monday, November 4.

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