Enviro Infra Engineers IPO: Unlisted shares of Enviro Infra Engineers Ltd are currently trading at Rs 200 per share in the grey market, which is Rs 52 or 35.14 per cent higher than the IPO issue price of Rs 148.
The Enviro Infra Engineers IPO, which was opened for public subscription on Friday, has received a decent subscription so far. Till 11:55 am on the second day of subscription on Monday, the Rs 650.43-crore IPO received a 5.97 times subscription garnering bidding for 18,37,49,704 shares as against the 3,07,93,600 shares on offer.
Enviro Infra Engineers is involved in development of turnkey projects of sewage treatment plants and sewerage system.
So far, the portion for non-institutional investors attracted 14.41 times subscription while the qualified institutional buyers (QIBs) part got subscribed 2.05 times. The category for retail individual investors (RIIs) fetched 4.57 times subscription.
The price band of the IPO has been fixed in the range of Rs 140-148 apiece.
Enviro Infra Engineers IPO GMP Today
According to market observers, unlisted shares of Enviro Infra Engineers Ltd are currently trading at Rs 200 per share in the grey market, which is Rs 52 or 35.14 per cent higher than the IPO issue price of Rs 148. The 35.14% GMP indicates an overwhelming listing gains. The IPO listing is scheduled to take place November 29.
The GMP is based on market sentiments and keeps changing. ‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Enviro Infra Engineers IPO: Should You Apply?
Most analysts recommended a ‘subscribe’ rating to the IPO on the back of its comfortable valuations compared to its listed peers.
Geojit Financial Services in its report said, “EIEL’s (Enviro Infra Engineers Ltd) order book has increased by 42 per cent, from Rs 1,496.7 crore in FY23 to Rs 2,125.6 crore in FY24. The company maintained an order book of Rs 1,906.3 crore in June 2024. The order book to sales ratio for FY24 stood at 2.6x, providing revenue visibility for the next 2 to 3 years.”
At the upper price band of Rs 148, EIEL is available at a P/E of 23.9x (FY24), which appears to be fairly priced compared to listed peers. The ambitious initiatives of the Indian government, such as the Jal Jeevan Mission-Har Ghar Jal, AMRUT, the NAMAMI Gange Programme, and SWAJAL, present significant opportunities for the company’s future growth. With a robust order pipeline and consistent financial performance featuring industry-leading margins, the company is well-positioned for future success.
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“We recommend ‘subscribe’ rating for the issue for medium- to long-term investment,” Geojit stated.
Another brokerage Anand Rathi in its IPO note said the company has an in-house designing, engineering and execution team 180 engineers with diversified order book of 21 projects across India for an aggregate value of Rs 19,062.8 million as of June 30, 2024 across India and in-house execution capabilities with timely delivery and established track record enabling consistent increase in eligibility for high value project tenders along with use of advanced technologies in the construction and installation of WWTPs and WSSPs.
“At the upper price band company is valuing at P/E of 30.72x, with an EV/EBITDA of 15.8x and market cap of ₹ 25,996 million post issue of equity shares and return on net worth of 37.83%. We believe that the IPO is fairly priced and recommend a ‘subscribe-long term’ rating to the IPO,” it added.
Brokerage firm Bajaj Broking in its IPO note said that regarding financial performance, in the past two fiscal years, the company has achieved a consolidated total income and net profit of Rs 225.62 crore and Rs 34.55 crore in FY22, Rs 341.66 crore and Rs 55.34 crore in FY23, and Rs 738.00 crore and Rs 108.57 crore in FY24.
“For the first quarter of FY25, ending on June 30, 2024, the company reported a net profit of Rs. 29.97 crore on a total income of Rs. 207.46 crore, indicating a significant increase in both revenue and profit from FY24 onwards,” Bajaj Broking stated.
Over the last three fiscal years, the company has maintained an average EPS of Rs. 5.95 and an average RoNW of 41.44%. The issue price is set at a P/BV of 6.27 based on a NAV of Rs. 23.60 as of June 30, 2024, and a P/BV of 2.90 based on a post-IPO NAV of Rs. 51.01 per share (at the upper cap), it added.
Enviro Infra Engineers IPO: More Details
The Rs 650.43-crore IPO is a combination of a fresh issue of 3.87 crore equity shares and an offer for sale (OFS) of 52.68 lakh shares by promoters. Ahead of the IPO, Enviro Infra Engineers garnered about Rs 195 crore from anchor investors.
Currently, promoters hold over 93 per cent stake in Enviro Infra Engineers.
The company plans to utilise the proceeds from the fresh issue to the tune of Rs 181 crore towards meeting the working capital requirements, Rs 100 crore will be used for payment of debt, Rs 30 crore will be infused into the company’s subsidiary, EIEL Mathura Infra Engineers, to build 60 million litres per day sewage treatment plant (STP) at Mathura in Uttar Pradesh. Besides, a portion will be used for general corporate purposes.
Enviro Infra Engineers is engaged in designing, construction, operation and maintenance of water and wastewater treatment plants and water supply scheme projects for government authorities/bodies.
The treatment process installed by the company at most of the STPs is zero liquid discharge-compliant and the treated water can be used for horticulture, washing, refrigeration and other process industries.
Hem Securities is the sole book-running lead manager of the public issue.
