Is Enviro Infra Engineers IPO Good or Bad - Detailed Review

Enviro Infra Engineers is kicking off its initial public offering which will be open from November 22, 2024, to November 26, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether Enviro Infra Engineers IPO is good or bad, whether it is worth investing in this IPO, and so on. 

This article provides a detailed review of this IPO, diving into its business operations and fundamental analysis to help you make a well-informed investment decision.

Company Overview of Enviro Infra Engineers IPO

Established in 2009, Enviro Infra Engineers Limited is engaged in the design, construction, operation, and maintenance of water and Waste-Water Treatment Plants (WWTPs) and water supply projects (WSSPs) for government agencies and entities. Its portfolio of services includes the development of Sewage Treatment Plants (STPs), Sewerage Schemes (SS), Common Effluent Treatment Plants (CETPs), and Water Treatment Plants (WTPs), along with pumping stations and pipeline installations for water supply.

The company’s Water and Wastewater Treatment Plants (WWTPs) and Water Supply Scheme Projects (WSSPs) are funded through a combination of government initiatives. In urban areas, these projects are partly financed by the Central Government under schemes such as the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), while certain projects, including those under the National Mission for Clean Ganga (NMCG), receive full funding.

For rural projects, WSSPs are supported by Central Government programs like the Jal Jeevan Mission (JJM). Additionally, State Governments and Urban Local Bodies (ULBs) contribute under their respective schemes, working alongside the Central Government to provide the necessary funding. This multi-tiered funding approach enables the company to execute infrastructure projects successfully across diverse regions.

The company has a strong in-house team for designing, engineering, and construction comprising 180 engineers, supported by consultants and experts. Furthermore, the company has its own civil construction team which reduces its reliance on external contractors and ensures smooth execution of projects.

The company bids for tenders issued by State Governments and ULBs to develop WWTPs and WSSPs on an EPC or HAM basis. As of June 30, 2024, the company has completed 28 WWTPs and WSSPs across India over the past seven years, including 22 projects with capacities of 10 MLD or more. During the same period, the company’s order book comprised 21 WWTPs and WSSPs with a total value of Rs.1,906.28 crores.

In addition to executing projects independently, the company also enters into joint ventures with other infrastructure and construction companies to jointly bid and execute projects. Joint ventures and partnerships allow the company to meet both technical and financial prequalification requirements during the bidding process. When a bid is successful, the company collaborates with its joint venture partners to execute the project, leveraging their technical expertise and qualifications to ensure successful project delivery.

Financial Overview of Enviro Infra Engineers IPO

The following table shows you the key financial details of Enviro Infra Engineers Limited for three financial years:

Source: RHP of the company

If we take a look at the financials of Enviro Infra Engineers IPO, we can see the company’s revenue has tremendously increased from Rs. 223.53 crores in FY22 to Rs. 728.92 crores in FY24. Similarly, its profits have also increased from Rs. 34.55 crores to Rs. 110.54 crores during the same period. 

As of FY24, the company reported an exceptional RoNW of 37.83% indicating a good return on the capital invested by the shareholders. However, this return has slightly reduced over the past three years due to the increasing borrowings in its balance.

Although the borrowings of the company have increased over the past three years, through its debt-to-equity ratio of 0.8 during FY24, we can determine that the company is not heavily leveraged and majorly depends on its own funds to run its business.

Lastly, we can also see that the company has also maintained an increasing order book which stood at Rs. 2,125.59 crores in FY24. This reflects an increasing demand for the company’s services and its potential to report increasing revenues in the future.

Strengths of Enviro Infra Engineers IPO

• In-house team of 180 engineers specializing in designing, engineering, and project execution.

• Expanding presence in key geographies, including Gujarat, Rajasthan, Punjab, Karnataka, Haryana, Uttar Pradesh, Madhya Pradesh, and Chhattisgarh, through new projects.

• Diversified order book with 21 projects across India, valued at Rs. 1,906.28 crores as of June 30, 2024.

• Use of advanced technologies in the construction and installation of Water and Wastewater Treatment Plants (WWTPs) and Water Supply Scheme Projects (WSSPs).

Risk Factors of Enviro Infra Engineers IPO

• The company depends on joint venture partners for bidding on selective government projects and executing awarded contracts. Any failure by these partners to fulfill their obligations could lead to additional financial and operational burdens, potentially resulting in reduced profitability or significant losses, thereby impacting the company’s overall business and financial condition.

• Rising prices of construction materials, labor, and contract-related charges pose a risk to the company, as these increases could adversely affect its operational results and financial performance.

• The premature termination of any awarded project, or those that may be awarded in the future, could result in the company not receiving payments, further impacting its financial stability.

• The nature of the company’s contracts exposes it to potential claims and counter-claims, including disputes with concessioning authorities, which could disrupt operations or lead to financial liabilities.

Enviro Infra Engineers Vs Peers

Below is the table showing a comparison of Enviro Infra Engineers with its listed industry peers as of FY24:

Source: RHP of the company

Enviro Infra Engineers Limited, with a total revenue of Rs. 738 crores, falls behind its peers. However, it stands out with a RoNW of 37.83%, which is the highest among its peers. This suggests that while the company operates at a smaller scale, it manages its resources effectively and delivers strong profitability relative to its equity base

Objective Of The Enviro Infra Engineers IPO

The company shall use the net proceeds from the fresh issue of the IPO for the following purposes:

• To meet its working capital requirements.

• To infuse funds into its subsidiary, EIEL Mathura Infra Engineers Private Limited, to build 60 MLD STP under the project titled ‘Mathura Sewerage Scheme” at Mathura in Uttar Pradesh through Hybrid Annuity PPP Mode

• Partial or complete repayment/prepayment of certain company outstanding borrowings.

• Funding inorganic growth through unidentified acquisitions and general corporate purposes. 

Enviro Infra Engineers IPO Details

IPO Date

Enviro Infra Engineers IPO is open to subscription from November 22, 2024, to November 26, 2024. The shares will be allocated to investors on November 27, 2024, and the company will be listed in the NSE and BSE on November 29, 2024

IPO Issue Price

Enviro Infra Engineers is offering its shares in the price band of Rs.140 to Rs.148 apiece. This means you would require an investment of Rs.14,948 per lot (101 shares) if you are bidding for the IPO at the upper price band.

IPO Size

The Enviro Infra Engineers is offering a total of 43,948,000 shares, amounting to Rs. 650.43 Crores. Out of these, 38,680,000 shares worth Rs. 572.46 Crores are offered through a fresh issue, and 5,268,000 shares worth Rs.77.97 Crores are offered through an offer for sale.

IPO GMP

Many investors look at the Grey Market Premium (GMP) before applying for Enviro Infra Engineers. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong Enviro Infra Engineers is. Thus, it is important to financially analyze the stock before investing in it.

IPO Allotment Status

The shares from Enviro Infra Engineers Limited will be allotted to its investors on November 29, 2024. One can check the allotment status for the IPO from its registrar Bigshare Services Private Limited, the BSE website, or your broking platform where you have applied for the IPO.

IPO Application Link

Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.

Apply for Enviro Infra Engineers IPO

Is Enviro Infra Engineers IPO a Good or Bad Investment? Final Thoughts

Enviro Infra Engineers Limited demonstrates strong fundamentals with a robust in-house execution team, advanced technologies, and the highest return on net worth (RoNW) of 37.83% among its peers, supported by a diversified order book and expanding geographical presence. The company's financial performance has shown significant growth, with increasing revenues and profits over the years, highlighting its potential for sustained growth. However, investors should consider risks such as dependence on joint ventures, rising construction costs, and contract disputes that could impact its profitability.

For those interested in investing in such IPOs, you can open a demat account with Rupeezy. Our trading platform allows you to participate in various investment opportunities including initial public offerings.