Concord Enviro IPO analysis

Concord Enviro IPO (initial public offering) will open for subscription on December 19, 2024, and close on December 23, 2024. We break down the EPC (engineering, procurement and construction) company's strengths, weaknesses and growth prospects to help investors make an informed decision. Concord Enviro IPO in a nutshell Quality : Between FY22 and FY24, the company reported a three-year average ROE and ROCE of around 7.3 and 6.9 per cent, respectively. Growth : Between FY22 and FY24, its revenue and profit after tax grew by 22.8 and 58.6 per cent per annum. Valuation : At the upper end of the price band, the stock is valued at a P/E and a P/B ratio of 35 and 2.9 times, respectively. Overview: The growing market for water treatment and increased government spending on water infrastructure is expected to help Concord Enviro expand its business. However, factors like competition from larger players and high working capital requirements pose a threat to the company's growth. About Concord Enviro Incorporated in 1999, Concord Enviro provides engineering, procurement and construction (EPC) services for wastewater treatment. Operating two manufacturing facilities in Maharashtra, the company has in-house capabilities to design, manufacture, install and operate water treatment plants. Concord Enviro primarily provides industrial wastewater reuse and zero liquid discharge solutions with its clients spanning various industries, including chemicals, pharmaceuticals, energy, automotive, etc. As of August 2024, the company had over 300 clients. It also has a significant presence in the international market, with exports contributing nearly 42 per cent of its revenue in FY24. Strengths of Concord Enviro Integrated solutions: Concord Enviro provides solutions across the supply chain of wastewater treatment plants and boasts in-house capabilities for most of its operations. As a result, the company has reported higher operating profit margins than its peers. Repeat business: The company has reflected significant client stickiness despite serving over 300 clients. In FY24, almost 93 per cent of its revenue came from repeat businesses. Weaknesses of Concord Enviro Revenue concentration: Concord's top 10 clients are responsible for almost 55 per cent of its revenue, which reflects substantial concentration considering that the company caters to over 300 customers. Losing any one of them can result in a significant blow to its financials. Concord Enviro IPO details Total IPO size (Rs cr) 500 Offer for sale (Rs cr) 325 Fresh issue (Rs cr) 175 Price band (Rs) 665-701 Subscription dates December 19-23, 2024 Purpose of issue To repay loans, meet capex requirements for subsidiaries Post-IPO M-cap (Rs cr) 1,450.8 Net worth (Rs cr) 496.4 Promoter holding (%) 51.4 Price/earnings ratio (P/E) 35.0 Price/book ratio (P/B) 2.9 Financial history Key financials 2Y Return(%) FY24 FY23