AVP Infracon Limited, an SME infrastructure company, has experienced a significant 120% surge in its stock price within the last eight months, reaching a lifetime high of ₹174.15 on November 11, 2024. This rally comes after a relatively modest initial public offering (IPO) debut in March 2024, where the stock was listed at ₹79 per share, only a 5.33% premium over the IPO price of ₹75.
Following the tepid listing, the stock has provided substantial returns, a noteworthy point for investors looking to invest in stocks.
Q2 FY25 financial performance boosts stock momentum
In the first half of FY25, AVP Infracon reported strong financial growth, contributing to the stock’s impressive rally. Consolidated revenue from operations rose by 63.05% year-on-year (YoY) to ₹109.22 crore, compared to ₹66.98 crore in the same period the previous year. Additionally, net profit increased by more than 75% YoY, reaching ₹12.76 crore in H1 FY25, up from ₹7.27 crore in H1 FY24. This growth trajectory has been a factor in drawing interest from investors who invest in stocks in the SME segment.
EBITDA growth and improved margins
During H1 FY25, AVP Infracon’s earnings before interest, tax, depreciation, and amortisation (EBITDA) rose by 63% YoY to ₹23.95 crore, with EBITDA margins reaching 21.92%, a slight increase of 2 basis points from the previous year. This operational stability may be of interest to those who invest in stocks in the infrastructure sector, as it highlights the company’s ability to maintain profitability amid rising costs.
Order book expansion with new contract wins
AVP Infracon’s order book, currently valued at ₹300 crore, saw substantial additions during H1 FY25. The company secured two contracts from the National Highways Authority of India (NHAI), collectively worth ₹41.25 crore. The first contract, valued at ₹33.93 crore, focuses on strengthening and overlaying the Thirumayam-Manamadurai section.
In contrast, the second contract, valued at ₹7.32 crore, involves operation, maintenance, and incident management services along the Pondicherry-Tindivanam section of NH-32. Additionally, the company received further contracts worth ₹70 crore from CDR & Co Constructions for projects including the construction of a bypass and road widening.
In November, AVP Infracon also won a ₹17 crore contract from the District Rural Development Agency (DRDA) in Kallakurichi for the supply of steel rods, further solidifying its order book. This expanded pipeline of projects may provide a valuable point of interest for those looking to invest in stocks within the infrastructure domain.
Credit rating upgrade reflects the enhanced financial stability
AVP Infracon’s financial stability received a boost in the first half of FY25 with a credit rating upgrade. The company’s long-term credit rating and short-term capital rating were both raised, which may be a consideration for those who prefer to invest in stocks of companies demonstrating credit resilience and financial strength. Such improvements in credit ratings can reflect a company’s growth potential and ability to meet its financial obligations.
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