Goldman Sachs, Nomura buy stake in Afcons Infrastructure despite muted listing

Marquee funds Goldman Sachs and Nomura picked up stakes in Afcons Infrastructure through bulk deals on Monday despite a negative listing at the bourses today.

While Goldman Sachs bought just over 25 lakh shares, Nomura acquired 49 lakh shares at an average price of Rs 448 apiece.

Afcons Infrastructure’s muted debut was in line with analyst expectations, driven by negative market sentiments and lower than expected subscription.

The subdued demand for IPO offer was mainly on the back of higher OFS by parent, which is facing a challenging phase marked by significant debt and family business restructuring.

“The IPO funds raised will help the parent better manage obligations, debt crisis in the other group companies. This objective was a hurdle for short term investors to bid aggressively,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities.

However, despite the listing below issue price, Tapse is optimistic on the business long term growth.”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,” he said.Allotted investors can hold the stock for the long term and can hold/accumulate more on dips with a target near to Rs 480-500.

“While the discounted listing may disappoint short-term investors, the IPO’s reasonable pricing, along with Afcons’ stable financial performance and project pipeline, offer potential long-term value. Investors with a long-term outlook may consider holding onto their shares, as the company’s fundamentals could drive gradual value appreciation once market conditions stabilize,” said Shivani Nyati, Head of Wealth at Swastika Investmart.

Afcons Infrastructure has a proven track record of successfully delivering a wide range of complex and challenging engineering, procurement, and construction (EPC) projects both domestically and internationally.

According to the Fitch Report, Afcons is recognized as one of India’s leading international infrastructure firms, as per the 2023 rankings by Engineering News-Record (ENR) based on international revenue for the financial year 2023.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

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