IPO listed on 21 Sep'23
EMS Ltd
Minimum Investment
₹ 14,770 / 70 shares
Grey market premium
₹ 120 (57% premium)
Issue price
₹ 211
Listing price
₹ 282
Listing gains
71 (34%)
Listing on
Sept 21, 2023
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- EMS exhibits a steady growth trajectory in terms of both its revenues and earnings, complemented by impressive return ratios and decent margins. Yet, it's important to note that there was a decline in profit margins in the recent financial year, along with other risks detailed below.
- From a valuation standpoint, the IPO appears to be attractively priced at a PE multiple of 11x on post-issue capital. Additionally, the grey market premium (GMP) for the issue indicates a premium listing.
- Taking these aspects into account, investors can consider "Subscribing" to this IPO for potential listing gains. For those with a long-term horizon, it would be prudent to monitor the company's forthcoming quarterly performance before making any investment commitments.
About the company
Founded in
21 Dec'10
Managing director
Ashish Tomar
- EMS offers services in sewage management, water supply infrastructure, water and wastewater treatment, electrical distribution and transmission, and road-associated initiatives. Additionally, it manages the operation and maintenance of water supply and wastewater projects for government entities.
- The company operates net debt-free and follows an asset-light business approach. Since its inception, they have successfully completed 67 projects. Presently, they are working on 18 projects and overseeing 5 operation and maintenance projects.
STRENGTHS
- Steady Track Record: Between FY21-23, EMS showcased an impressive revenue growth at a CAGR of 28%, coupled with a 23% growth in both EBITDA and Net Profit.
- Robust Order Book: As of July 31, 2023, the company's order book (yet to be billed) stands at ~Rs 1,845 crore.
- Impressive Profit Margins & Return Ratios: The EBITDA Margin stood at 27.69% for FY23, while the Net Profit Margin reached 20.18%. The company reported a robust 22% Return on Equity and a 28% Return on Capital Employed for the same fiscal year.
RISK FACTORS
- Dependency on Government Contracts: Their revenue is entirely dependent on government projects. If there are any shifts in government policies regarding environment and water treatment, it could negatively impact the company's performance.
- Huge Working Capital Requirements: The business requires substantial working capital because of long gestation periods and delays in collection of receivables. However, the funds from the IPO will assist the company in addressing its working capital demands, enhancing its capability to undertake high-value projects.
- Contingent Liabilities: As of March 31, 2023, the company reported contingent liabilities of Rs 252 crore, which, if materialized, could affect its financial condition.
- Cash Flow Concerns: EMS has experienced negative cash flows from operations in FY23. Persistent negative cash flow might affect its operations and growth.
Issue details
Issue type
Mainstream
Issue size
₹ 321.24 crore
Fresh Issue
₹ 146.24 crore
OFS
₹ 175 crore
Price range
₹ 200 - 211
Lot size
70 shares
Issue Objective
Net proceeds from the fresh issue will be utilised towards:
- Funding of working capital requirements of the company; and
- General corporate purposes.
Dates
Bidding open
8 Sep'23
Bidding close
12 Sep'23
Allotment date
15 Sep'23
Refund date
18 Sep'23
Listing
21 Sep'23
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
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