AVP Infracon Limited: A Comprehensive Investment Overview

Pasal Wealth
19 minutes ago
4 min read

Stock Snapshot (as of June 3, 2025)

Previous Close: ₹174.7
Sector: Infrastructure
Market Cap: ₹437 Cr
TTM P/E: 13.2x
Sectoral P/E Range: 10–50
P/E Remark: At the lower end of the sector range, indicating potential undervaluation
NSE – SME: AVPINFRA (Lot Size: 800 shares)

Company Overview

AVP Infracon Limited is a dynamic player in the infrastructure sector, specializing in Bill of Quantities (BOQ) and Engineering, Procurement, and Construction (EPC) methods. The company undertakes a diverse portfolio of projects, including:

Roads, highways, and expressways
Bridges, flyovers, and viaducts
Irrigation and urban development projects
Commercial and residential developments (hospitals, warehouses, hotels)

Key Clients:

Greater Chennai Corporation
National Highways Authority of India (NHAI)
Tamil Nadu Public Works Department
Tamil Nadu Highways Department

Geographic Presence: Currently, 100% of revenue is derived from Tamil Nadu (FY25), with plans to expand to 25–30% from other states by FY26.

Financial Performance (H1FY24 to H1FY25)

AVP Infracon has demonstrated robust financial growth, reflecting operational efficiency and strong market demand.

Metric (₹ Cr)	Mar-23	Sep-23	Mar-24	Sep-24	Mar-25
Sales	161	67	94	109	184
Op Profit	35	14	21	23	37
Net Profit	19	8	11	13	20
OPM (%)	22%	21%	22%	21%	20%
NPM (%)	12%	12%	12%	12%	11%

Key Highlights:

H1FY25 Results (Mar-25): Sales surged 96% YoY (₹94 Cr to ₹184 Cr) and 84% HoH. Net profit grew 81% YoY (₹11 Cr to ₹20 Cr) and 54% HoH.
H1FY24 Results (Sep-24): Sales up 63% YoY (₹67 Cr to ₹109 Cr); net profit up 86% YoY (₹7 Cr to ₹13 Cr).
Historical Growth: Sales grew from ₹58 Cr in Mar-19 to ₹293 Cr in Mar-24, a 5x increase over five years.

Share Price Performance (Apr-24 to Mar-25)

AVP Infracon’s stock has shown significant volatility and growth over the past year, reflecting investor confidence and market dynamics.

Month	Price (₹)
Apr-24	87
May-24	106
Jun-24	140
Jul-24	148
Aug-24	173
Sep-24	164
Oct-24	150
Nov-24	178
Dec-24	208
Jan-25	207
Feb-25	187
Mar-25	125

Observation: The stock peaked at ₹208 in Dec-24 but corrected to ₹125 by Mar-25, indicating potential market adjustments or profit booking.

Key Growth Triggers (Till Q4FY25)

AVP Infracon is poised for significant growth, driven by a robust order book, strategic diversification, and operational expansion.

Ambitious Revenue Targets:
- FY26: ₹500 Cr (EPC) + ₹75–100 Cr (solar EPC) = ₹575–600 Cr (2x growth from FY25).
- FY27: ₹750–800 Cr, with an aspirational target of ₹1,000 Cr within two years.
- FY25 Performance: Achieved 82% revenue growth against a guidance of 55%.
Strong Order Book:
- Unexecuted order book stands at ₹400 Cr as of May 2, 2025.
- Secured orders worth ₹750 Cr in FY25, primarily from the road sector.
- Recent orders include:
  - ₹87 Cr for road widening (Feb-25, 18 months).
  - ₹39 Cr for highway maintenance (Apr-25, 6 months).
  - ₹21 Cr for cold storage and warehouse construction (Mar-25, 10 months).
  - ₹9.2 Cr for a 2.08 MWp solar project (Feb-25, 180 days).
Geographic Expansion:
- Plans to derive 25–30% of FY26 revenue from outside Tamil Nadu, reducing regional dependency.
- Exploring opportunities in states like Madhya Pradesh and Telangana (JV projects pending).
Capex and Funding:
- Planned capex of ₹15–20 Cr for FY26, partially funded by unutilized IPO proceeds held in fixed deposits.
- Fixed assets grew 2.4x from ₹31 Cr (Mar-24) to ₹75 Cr (Mar-25).
Operational Scale-Up:
- EPFO employee count increased 26% from 46 (Sep-24) to 58 (Apr-25).
- Established a new Crusher Unit in Tirupur (₹17 Cr investment, operational by mid-2025) to ensure raw material supply.
- Inaugurated a third Ready Mix Concrete (RMC) plant in Tirupur (90% stake).
Diversification into Solar EPC:
- Formed AVP Renewable Energies Limited to tap into solar energy projects.
- Secured a ₹9.2 Cr solar project in Feb-25, signaling entry into the renewable energy space.
Private Sector Focus:
- Currently executing 100% government orders but targeting private sector and PSU projects from FY27 onward.

Key Red Flags (Till Q3FY25)

While AVP Infracon shows strong growth potential, certain risks warrant attention:

Negative Operating Cash Flow (OCF):
- Reported negative OCF in FY23 and FY24, though the company aims to become cash flow positive by FY27.
Rising Debt:
- Short-term borrowings increased 5.7x from ₹12 Cr (Mar-22) to ₹68 Cr (Sep-24), raising concerns about leverage.
Regional Concentration:
- 100% revenue from Tamil Nadu in FY25, exposing the company to regional economic or policy risks.
Execution Risks:
- Aggressive order book growth and geographic expansion may strain operational capabilities if not managed effectively.

Recent Developments

Promoter Confidence: Promoters purchased shares in Feb-25 and Mar-25 (total ~20k shares, ₹36.4L), signaling strong belief in future growth.
Credit Rating Upgrade (Nov-24):
- Long-term: CRISIL BB/Stable to CRISIL BBB-/Stable.
- Short-term: CRISIL A4+ to CRISIL A3.
New Subsidiary: AVP Renewable Energies Limited incorporated to focus on solar EPC projects.
Order Wins: Secured contracts worth ₹294.9 Cr in FY25, including road, highway, solar, and steel supply projects.

Investment Thesis

Why Consider AVP Infracon?

Undervalued Valuation: TTM P/E of 13.2x is at the lower end of the sectoral range (10–50), suggesting room for upside.
Robust Growth: Consistent revenue and profit growth, with ambitious targets of ₹575–600 Cr (FY26) and ₹1,000 Cr (FY27).
Diversification: Expanding into solar EPC and private sector projects while reducing reliance on Tamil Nadu.
Strong Order Pipeline: ₹400 Cr unexecuted order book and ₹750 Cr fresh inflows in FY25 provide revenue visibility.

Risks to Monitor:

Negative OCF and rising debt levels could impact financial stability.
Execution challenges in new geographies or sectors (e.g., solar EPC).
Dependence on government contracts until private sector contributions ramp up.

Conclusion

AVP Infracon Limited is a compelling SME stock with strong growth prospects in the infrastructure and renewable energy sectors. Its aggressive revenue targets, expanding order book, and strategic diversification make it an attractive pick for investors seeking exposure to India’s infrastructure boom. However, risks such as negative cash flows and high debt levels require careful monitoring. With a TTM P/E of 13.2x and a robust project pipeline, AVP Infracon could offer significant upside for risk-tolerant investors.

Website: avpinfra.com