Enviro Infra Engineers IPO analysis

Enviro Infra Engineers IPO (initial public offering) will open for subscription on November 22, 2024 and close on November 26, 2024. We breakdown the strengths, weaknesses and growth prospects of the water management solutions provider to help investors make an informed decision. Enviro Infra Engineers IPO in a nutshell Quality: During FY22-24, Enviro Infra Engineers reported a three-year average ROE and ROCE of 52.2 and 52 per cent, respectively. Growth: During FY22-24, its revenue and net profit grew by 81 and 84 per cent per annum, respectively. Valuation: Post-listing, the stock will be valued at a P/E and a P/B ratio of 23.5 and 2.9 times, respectively. Overview: The growing market for water treatment and increased government spending on water infrastructure will help the company scale its business. However, competition from large companies and high working capital requirements pose a threat. About Enviro Infra Engineers Incorporated in 2009, Enviro Infra is engaged in the design, construction, operation and maintenance of water and wastewater treatment plants (WWTP) and water supply scheme projects (WSSP). The company primarily serves government bodies, with 86 per cent of its FY24 revenue coming from the engineering, procurement, and construction (EPC) segment. As of Q1FY25, Enviro Infra has successfully delivered 28 WWTP and WSSP projects across India, completing 22 in the past seven years. Strengths of Enviro Infra Engineers Strong order book: Thanks to its in-house expertise and track record of timely execution of projects across different Indian states, Enviro Infra has earned an order book of Rs 1,906 crore (as of Q1FY25), almost three times its FY24 revenue. Weaknesses of Enviro Infra Engineers Capital-intensive business : Enviro Infra Engineers requires huge capital to grow its business. As a result, its debt has increased significantly from Rs 18 crore in FY22 to Rs 305 crore, as of Q1FY25. Cash flow from operations (CFO) remains low, with Rs 73 crore generated in the last three years. Dependence on government: The company's projects come from government contracts, making business operations heavily dependent on government spending on water treatment. Enviro Infra Engineers IPO details Total IPO size (Rs cr) 650 Offer for sale (Rs cr) 78 Fresh issue (Rs cr) 572 Price band (Rs) 140-148 Subscription dates November 22, 25 and 26, 2024 Purpose of issue To meet working capital requirements, repay debt and fund inorganic growth Post-IPO M-cap (Rs cr) 2,597.8 Net worth (Rs cr) 895.5 Promoter holding (%) 70.0 Price-to-earnings ratio (P/E) 23.5 Price-to-book ratio (P/B) 2.9 Financial history Key financials (Rs cr)