Enviro Infra Engineers IPO - Should You Subscribe? Read DRChoksey's Analysis

Deven Choksey Report

Enviro Infra Engineers Ltd. will launch its initial public offering on Nov. 22 and the offer closes for subscription on Nov. 26. The Delhi-based a leading engineering company specialising in the design, construction and maintenance of water and wastewater treatment solutions has fixed a price band of Rs 140 to Rs 148 per share. The minimum order lot for bidding is 101 shares or in multiples thereof.

The Rs 650.43 crore IPO is a combination of fresh issue of 3.86 crore equity shares and an offer for sale component of 52.68 lakh.

Object of the issue

• To meet the Working Capital Requirements.

• Infusion of funds into EIEL Mathura to build a 60 MLD STP under the 'Mathura Sewerage Scheme' in Mathura, Uttar Pradesh, through Hybrid Annuity Based PPP Mode.

• Repayment/prepayment in full or in part, of certain of outstanding borrowings

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

Outlook & Valuation:

Enviro Infra Engineers, established in 2009, specializes in water and wastewater treatment projects, leveraging its in-house capabilities to execute large-scale initiatives under EPC and HAM models. With a diversified Rs 19,063, million order book and a focus on renewable solutions like solar and biogas, Enviro Infra is well-positioned in India’s growing water infrastructure market, supported by initiatives like Jal Jeevan Mission and Namami Gange.

As the global water treatment market grows at a 6.10% CAGR, Enviro Infra’s operational efficiency, sustainable practices and alignment with industry dynamics offer attractive growth potential.

The company has reported revenue CAGR of 80.58% and PAT CAGR of 77.27% from FY22-24. The company has return on equity and return on capital employed of 51.68% and 32.34%, respectively for FY24. The company is valued at an EV/Ebitda of ~16x and a P/E of ~24x and offers an attractive valuation compared to its peers.

Considering its robust project pipeline, consistent financial performance and margin-enhancing operations and maintenance contracts, we assign a “Subscribe” rating.

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