Enviro Infra Engineers Limited (EIEL) specializes in the design, construction, operation, and maintenance of Water and Wastewater Treatment Plants (WWTPs) and Water Supply Scheme Projects (WSSPs). The company plays a key role in delivering sustainable infrastructure solutions for urban and rural areas, primarily catering to government authorities and bodies. EIEL’s expertise lies in providing high-quality solutions to optimize water resources and meet the growing demand for clean water in India.

Enviro Infra Engineers IPO Overview

Enviro Infra Engineers is launching a Book Built Issue with a total issue size of ₹650.43 Crore. The fresh issue comprises 386.80 lakh shares worth ₹572.33 Crore, while the Offer for Sale (OFS) portion includes 52.68 lakh shares totaling ₹77.97 Crore. The subscription period for the Enviro Infra Engineers IPO will run from November 22, 2024 to November 26, 2024, with the allotment date expected to be November 27, 2024, and listing date on or around November 29, 2024.

The price band for the IPO is set between ₹140 and ₹148 per equity share, with a minimum lot size of 101 shares. Retail investors will need to invest at least ₹14,948, while High-Net-Worth Individuals (HNIs) are required to invest in 14 lots (1,414 shares), amounting to ₹2,09,272. At the upper price band of ₹148, the company’s market capitalization will stand at ₹2,597.84 Crore.

IPO Subscription and Market Sentiment

The subscription status for the Enviro Infra Engineers IPO is showing remarkable investor interest. As of November 26, 2024, the IPO has been subscribed 89.90 times on its final day, reflecting strong demand from retail and institutional investors.

Furthermore, the Grey Market Premium (GMP) for the IPO is currently ₹45, which suggests potential listing gains of around 30% above the issue price. However, it’s important to note that the Grey Market Premium is based on unregulated trading and should be considered only as an informational indicator rather than a guarantee of future performance.

Financial Performance and Valuation

Enviro Infra Engineers has demonstrated impressive growth in recent years. The company reported revenue of ₹73,800.46 Lakhs in FY24, up from ₹34,166.24 Lakhs in FY23 and ₹22,562 Lakhs in FY22. Its EBITDA also grew significantly, reaching ₹17,841.20 Lakhs in FY24, compared to ₹8,524.78 Lakhs in FY23 and ₹5,212.11 Lakhs in FY22. The company’s profit after tax (PAT) surged to ₹10,856.95 Lakhs in FY24, highlighting strong financial performance and profitability.

The IPO is priced at a pre-issue earnings per share (EPS) of ₹8.13, and a post-issue EPS of ₹6.30, reflecting a P/E ratio of 18.20x pre-issue and 23.50x post-issue. These figures compare favorably with the industry P/E of 30x, suggesting that the IPO is reasonably priced. Additionally, the company’s Return on Capital Employed (ROCE) of 32.34% and Return on Equity (RoE) of 51.68% underscore its strong financial health and operational efficiency.

IPO Objectives and Use of Proceeds

The funds raised through the fresh issue will be used for the following purposes:

1. Working Capital Requirements: ₹18,100 Lakhs will be allocated to ensure the company has sufficient liquidity to manage its ongoing operations.
2. Subsidiary Investment: ₹3,000 Lakhs will be infused into the company’s subsidiary, EIEL Mathura Infra Engineers Private Limited, to build a 60 MLD STP as part of the Mathura Sewerage Scheme project in Uttar Pradesh.
3. Debt Repayment: ₹12,000 Lakhs will be used to repay or prepay certain outstanding borrowings, reducing the company’s financial leverage.
4. Inorganic Growth and Corporate Purposes: The remaining funds will be allocated for potential acquisitions and general corporate needs.

Anchor Investors and Market Maker Role

The IPO has garnered significant interest from anchor investors, who have committed ₹194.69 Crore at the upper price band of ₹148 per share. The anchor investors have been allocated 1,31,54,400 equity shares in total. Hem Securities Limited is the book-running lead manager for the issue, while Bigshare Services Pvt. Ltd. serves as the registrar.

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IPO Allotment Process

The allotment date for the Enviro Infra Engineers IPO is November 27, 2024. To check the allotment status, investors can follow these steps:

1. Visit the registrar’s IPO allotment page.
2. Select Enviro Infra Engineers Limited IPO from the dropdown.
3. Enter the application number, PAN, or DP Client ID.
4. Submit the details to check the allotment status.

Investment Recommendation

Given the strong financial performance, reasonable pricing, and high subscription levels, we recommend investors to consider applying for the Enviro Infra Engineers IPO. The Grey Market Premium of ₹45 indicates potential listing gains, and the company’s steady growth and solid ROE and ROCE suggest that it could be a good long-term investment. However, as with any IPO, investors should evaluate their risk tolerance and investment horizon before making a decision.

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