The Apex Ecotech IPO is scheduled to open on November 27, 2024, and close on November 29, 2024, offering a fresh issue of 34.99 lakh shares totaling ₹25.54 Crores. The price band is set between ₹71 to ₹73 per share, and the market capitalization of Apex Ecotech at the upper price of ₹73 per share will be ₹96.25 Crores. The IPO is being offered through the book-building process, with the allotment process expected to be finalized on December 2, 2024, and shares listed on the NSE SME on December 4, 2024.

The lot size is 1,600 shares, with retail investors required to invest a minimum of ₹1,16,800 and ₹2,33,600 for High-Net-Worth Individuals (HNIs). The book-running lead manager for this IPO is Share India Capital Services Private Limited, and KFin Technologies Limited is the registrar, while Share India Securities serves as the market maker.

Apex Ecotech: Company Overview

Apex Ecotech Limited specializes in end-to-end water and wastewater management solutions, covering services like Industrial Water Treatment, Effluent Treatment, Sewage Treatment, and Zero Liquid Discharge (ZLD). The company has built a reputation for delivering sustainable, turnkey projects, providing comprehensive services from design and installation to commissioning and O&M (operation and maintenance). Apex Ecotech aims to enhance eco-friendly water management through its innovative solutions.

Financial Performance and Metrics

Apex Ecotech has demonstrated significant growth in recent years, with revenue for the quarter ending September 30, 2024, standing at ₹2,182.60 Lakhs, showing an increase from ₹3,492.06 Lakhs in Fiscal Year 2023 and ₹2,002.86 Lakhs in Fiscal Year 2022. For FY24, the company reported an EBITDA of ₹926.48 Lakhs and a Profit after Tax (PAT) of ₹663.04 Lakhs, reflecting steady financial growth.

The company’s pre-issue EPS is ₹7.25, with a post-issue EPS of ₹5.03. The pre-issue P/E ratio is 10.07x, and the post-issue P/E ratio is 14.52x, which is well below the industry P/E ratio of 30x. The company’s Return on Capital Employed (ROCE) for FY24 is 59.61%, and its Return on Net Worth (RoNW) stands at an impressive 60.38%, indicating strong financial health.

Grey Market Premium and IPO Valuation

The Grey Market Premium (GMP) for the Apex Ecotech IPO is currently ₹15 (20%), suggesting that the stock may experience some listing gains post-IPO. However, as GMP can be volatile and is based on demand and supply in unorganized markets, it is not a reliable indicator for investment decisions. Given the company’s positive financial outlook and reasonable IPO pricing, some investors may find value in applying for the IPO.

The Upcoming IPOs in this week and coming weeks are Ganesh Infraworld, Suraksha Diagnostic, Property Share REIT, Rosmerta Digital, Avanse Financial and Nisus Finance.

The Current active IPO is Agarwal Toughened, Apex Ecotech, Abha Power and Steel and Rajputana Biodiesel.

IPO Proceeds Utilization

The funds raised from the Fresh Issue will be utilized for:

• ₹1,700 Lakhs towards working capital requirements to support ongoing projects and growth.
• The remaining funds will be allocated for general corporate purposes.

Apex Ecotech IPO Review and Investment Advice

Apex Ecotech’s financial growth, strong management team, and its role in the rapidly evolving water and wastewater management industry make it an interesting investment opportunity. However, considering the company’s post-issue P/E ratio of 14.52x, which is still below the industry average, the valuation appears fairly priced.

Given the GMP of ₹15, there are potential short-term gains if the stock performs well on listing. As such, this IPO might be suitable for risk-tolerant investors seeking potential listing gains.

However, long-term investors should assess their own risk profile before applying, as the company operates in a highly competitive market with fluctuating demand for its services.

Conclusion

In conclusion, Apex Ecotech IPO presents a fairly priced investment opportunity with solid financial performance and promising industry prospects. Investors looking for short-term gains might find the GMP insights encouraging, but long-term investors should carefully consider the competitive landscape and future growth potential.

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