The initial public offer of water and sewage infra player EMS opened for public subscription. The issue, which closes on September 12, comprises a fresh equity issue of Rs 146 crore and an OFS of 82.94 lakh shares.

Analysts advised investors to subscribe to the IPO over fair valuations, robust order book, and strong execution capabilities with vast industry experience.

EMS offers water and sewage infra solutions, including laying the network to build sewage and water treatment plants in the northern states of UP, Bihar, Uttarakhand, and Rajasthan.

The company has executed 67 projects over the past 13 years and has an order book of Rs 1,775 crore, which includes 18 ongoing projects.

“On the upper price band, the issue is valued at a P/E of 9.1x based on FY2023 earnings, which we feel is fairly valued compared to its peers. We, therefore, recommend a Subscribe rating for the issue,” said Stoxbox.

The company has fixed a price band of Rs 200-211. About 50% of the offer is reserved for qualified institutional buyers (QIB), 15% for non-institutional investors, and the rest 35% for retail investors.

“EMS has a strong in-house designing, engineering, and execution team. They have a strong execution capability with industry experience. We believe that the issue is reasonably priced and recommend Subscribe rating to the IPO,” said Anand Rathi.

Some of the company’s competitive strengths include a healthy order book, experienced management team, strong execution, and in-house designing capabilities.

On the risk front, EMS is heavily dependent on government projects and the business is working capital intensive, due to which high liquidity is required.

“This IPO will give us a boost in meeting the company’s working capital needs and improve its eligibility for high-value projects,” the company’s promoter Ramveer Singh had said earlier.

In FY23, total revenues from operations stood at Rs 538 crore. EBITDA for the same period was at Rs 149 crore, and PAT stood at Rs 108.62 crore.

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