Enviro Infra Engineers IPO Day 1: GMP up 26%; Should you subscribe?

Enviro Infra Engineers IPO GMP zooms: The grey market premium of the initial public offering (IPO) of Enviro Infra Engineers remains intact on the first day of its subscription. The unlisted shares of Enviro Infra Engineers were quoted trading at a premium of Rs 38, which translated into a GMP of 25.68 per cent against the upper end of the public offering, revealed sources tracking unofficial market activities.  

 

Enviro Infra Engineers IPO is a book-built issue comprising a fresh issue of 3,86,80,000 shares and an offer for sale (OFS) with promoters offloading 52,68,000 shares with a face value of Rs 10. Among the promoters, Sanjay Jain, Manish Jain, Ritu Jain, and Sachi Jain will be participating in the OFS.  

 

Enviro Infra Engineers has announced that it has already raised Rs 194.69 crore from anchor investors on the bidding concluded on Thursday, November 21, 2024.   

The public offering of Enviro Infra Engineers is available at a price band of Rs 140-148, with a lot size of 101 shares. Accordingly, investors can bid for a minimum of 101 shares and in multiples thereof. A retail investor would require a minimum of Rs 14,948 to bid for one lot of 101 shares of Enviro Infra Engineers IPO.  Therefore, for a maximum bid of under Rs 200,000 for a retail investor, s/he can bid for 1313 number of shares, or 13 lots in this IPO.

 

The subscription window to bid for the Enviro Infra Engineers IPO is slated to conclude on Tuesday, November 26, 2024. Following that, the basis of allotment for Enviro Infra Engineers IPO is expected to be finalised on Wednesday, November 27, 2024, and subsequently, the company’s shares will be credited to demat accounts on Thursday, November 28, 2024.  

 

Shares of Enviro Infra Engineers are expected to make their debut on the bourses on Friday, November 29, 2024, by listing on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).  

 

The proceeds from the Offer for Sale will be received by the promoter selling shareholders and will not form part of the proceeds from the Fresh Issue, stated Enviro Infra Engineers in the RHP.  

 

Enviro Infra Engineers, in its Red Herring Prospectus (RHP), stated that it intends to utilise the proceeds from the Fresh Issue towards funding working capital requirements, infusing funds into its subsidiary, EIEL Mathura Infra Engineers, to build a 60 MLD STP under the project titled 'Mathura Sewerage Scheme' at Mathura in Uttar Pradesh through Hybrid Annuity-Based PPP Mode, repayment/prepayment, in full or in part, of certain outstanding borrowings, funding inorganic growth through unidentified acquisitions, and for general corporate purposes.  

 

For the public offering of Enviro Infra Engineers, Bigshare Services is the registrar, while Hem Securities is the sole book-running lead manager for the public offering.  

 

Enviro Infra Engineers IPO review  

Brokerages including Deven Choksey Research, Anand Rathi Research, Bajaj Broking and Swastika Investmart have shared broadly positive reviews for the Enviro Infra Engineers IPO

 

Should you Subscribe to the Enviro Infra Engineers IPO? 

Deven Choksi Research - Subscribe  

Analysts at Deven Choksi Research remain bullish on the public offering of Enviro Infra Engineers IPO and have recommended subscribing to the public offering. With a diversified Rs 1,906.30 crore order book and a focus on renewable solutions like solar and biogas, EIEL, analysts said, is well-positioned in India’s growing water infrastructure market, supported by initiatives like Jal Jeevan Mission and Namami Gange.  

 

“As the global water treatment market grows at a 6.10 per cent CAGR, EIEL’s operational efficiency, sustainable practices, and alignment with industry dynamics offer attractive growth potential,” said the analysts.  

 

According to the analysts, the company is valued at an EV/Ebitda of 16x and a P/E of 24x and offers an attractive valuation compared to its peers. “Considering its robust project pipeline, consistent financial performance, and margin-enhancing O&M contracts, we assign a ‘Subscribe’ rating.”  

 

Anand Rathi Research - Subscribe for long-term  

Brokerage firm Anand Rathi Research has recommended investors subscribe to the Enviro Infra Engineers IPO for the long term. In its note, the brokerage highlighted that the company has an in-house design, engineering, and execution team of 180 engineers with a diversified order book of 21 projects across India, aggregating to Rs 1,906.28 crore as of June 30, 2024. The company also has in-house execution capabilities with timely delivery and an established track record enabling consistent eligibility for high-value project tenders, along with the use of advanced technologies in constructing WWTPs and WSSPs.  

 

According to Manan Goyal, Anand Rathi Research, at the upper price band, the company is valued at a P/E of 30.72x, an EV/Ebitda of 15.8x, and a market cap of Rs 2,599.6 crore post-issue of equity shares, with a return on net worth of 37.83 per cent. He noted that the valuation appears fair.  

 

Bajaj Broking - Subscribe for long-term  

Analysts at Bajaj Broking have also recommended subscribing to the public offering with a long-term perspective. In a research note, analysts cited the company’s in-house design, engineering, and execution team, as well as its growing presence in existing regions with new projects and a diversified order book, as key strengths.  

 

The company is led by experienced promoters and a senior management team and has shown consistent financial performance. Analysts highlighted the company’s use of "advanced technologies in constructing and installing WWTPs or WSSPs."  

 

However, they identified groundwater depletion and untreated water discharge as significant challenges for the water and wastewater treatment market, which could pose threats to the company. Additionally, limited funds may pose challenges in certain regions, they noted.  

 

Swastika Investmart - Subscribe for long-term  

Mirroring the views of other brokerages, Swastika Investmart has also recommended investors subscribe to the Enviro Infra Engineers IPO for the long term, citing that the IPO is fairly priced and offers a reasonable valuation.  

 

The brokerage further stated that the company is expanding its footprint with new projects, backed by a strong order book, and has demonstrated robust growth in both revenue and profits.  

 

About Enviro Infra Engineers  

 

Established in 2009 and headquartered in Delhi, Enviro Infra Engineers (EIEL) is a leading engineering company specialising in the design, construction, and maintenance of water and wastewater treatment solutions. The company’s operations span India, leveraging its advanced capabilities to deliver projects that meet stringent regulatory and environmental standards while ensuring long-term operational efficiency and resource conservation.  

 

Enviro Infra Engineers' net profit attributable to the owners rose to Rs 110.54 crore in FY24, up 110 per cent from Rs 54.97 crore reported in FY23, and 219 per cent from Rs 35.55 crore reported in FY22, as per the RHP.   The company’s revenue from operations jumped to Rs 738 crore, up 116 per cent from Rs 341.66 crore reported in FY23, and 227 per cent from Rs 225.62 crore reported in FY22.