Enviro Infra Engineers IPO: A Comprehensive Overview

The much-anticipated IPO of Enviro Infra Engineers Limited is set to open for subscription on Friday, November 22, and will close on Tuesday, November 26. Established in 2009, the company has carved a niche for itself in the water and wastewater treatment sector, specializing in the design, construction, operation, and maintenance of Water Treatment Plants (WTPs) and Waste-Water Treatment Plants (WWTPs) for government entities.

Company Background

Enviro Infra Engineers has been actively involved in bidding for projects from state governments and urban local bodies (ULBs). The company employs Engineering, Procurement, and Construction (EPC) and Hybrid Annuity Model (HAM) frameworks to execute its projects. Over the past seven years, as of June 30, 2024, Enviro Infra has successfully completed 28 WWTPs and WSSPs across India, with 22 of these projects boasting a capacity of 10 MLD or more. Currently, the company has 21 projects in its order book, valued at approximately ₹1,90,628.06 lakhs.

Financial Performance

The financial trajectory of Enviro Infra Engineers has shown promising growth. In the last two fiscal years, the company reported:

• FY22: Total income of ₹225.62 crore and net profit of ₹34.55 crore.
• FY23: Total income of ₹341.66 crore and net profit of ₹55.34 crore.
• FY24: Total income of ₹738.00 crore and net profit of ₹108.57 crore.

In the first quarter of FY25, the company announced a net profit of ₹29.97 crore alongside a total income of ₹207.46 crore, indicating a significant increase in both revenue and profit compared to the previous fiscal year.

Competitive Landscape

According to the red herring prospectus (RHP), Enviro Infra Engineers competes with several listed peers, including:

• EMS Ltd (P/E: 25.92)
• ION Exchange Ltd (P/E: 38.68)
• Va Tech Wabag Ltd (P/E: 43.90)
• Vishnu Prakash R Punglia Ltd (P/E: 25.31)

These comparisons provide potential investors with a benchmark for evaluating the company’s market position.

IPO Details

Key Information

1. IPO Date: Opens on November 22 and closes on November 26.
2. Price Band: Set between ₹140 to ₹148 per equity share.
3. Lot Size: Minimum of 101 equity shares, with subsequent multiples of 101.
4. Fresh Issuance: The IPO includes a fresh issuance of 3.87 crore equity shares and a sale of 52.68 lakh shares by selling shareholders.
5. Lead Manager: Hem Securities Ltd is the book running lead manager, while Bigshare Services Pvt Ltd acts as the registrar.

Utilization of Funds

The funds raised through this IPO will be allocated for various purposes, including:

• Meeting working capital requirements.
• Supporting the subsidiary EIEL Mathura in constructing a 60 MLD STP for the Mathura Sewerage Scheme.
• Repaying current debts.
• Facilitating growth through potential acquisitions and general corporate needs.

Allotment and Listing

The allocation of shares is scheduled for November 27, with refunds processed the same day. Shares will be credited to demat accounts on November 28, and the expected listing date on BSE and NSE is November 29.

Reservation Details

The IPO has reserved:

• Up to 50% for Qualified Institutional Buyers (QIB).
• At least 15% for Non-Institutional Investors (NII).
• A minimum of 35% for retail investors.
• An employee portion of up to 1,00,000 equity shares, with a discount of ₹13 per share for eligible employees.

Investment Perspective

Analysts recommend subscribing to the IPO with a long-term perspective. Over the last three fiscal years, Enviro Infra has maintained an average EPS of ₹5.95 and an average Return on Net Worth (RoNW) of 41.44%. The issue price corresponds to a P/BV of 6.27 based on a NAV of ₹23.60 as of June 30, 2024, and a P/BV of 2.90 based on a post-IPO NAV of ₹51.01 per share (at the upper cap).

However, the company’s debt of ₹305 crore as of June 30, 2024, raises some concerns, which potential investors should consider.

Grey Market Premium

As of the latest updates, the grey market premium (GMP) for Enviro Infra Engineers stands at +31, indicating a strong demand for the shares. This suggests that the shares may list at approximately ₹179, representing a 20.95% premium over the upper end of the IPO price band.

Conclusion

The Enviro Infra Engineers IPO presents a compelling opportunity for investors looking to enter the infrastructure sector, particularly in water and wastewater management. With a solid track record, promising financials, and a strategic plan for growth, the company is well-positioned for future success. However, potential investors should conduct thorough research and consider the associated risks before making any investment decisions.