Enviro Infra Engineering Limited IPO: 10 Key Things to Know Before Investing

Enviro Infra Engineering Limited, a notable player in water and wastewater management, is set to launch its ₹650.43 crore Initial Public Offering (IPO) on November 22, 2024. This IPO is great opportunity for investors to participate in a company that plays a crucial role in India’s water infrastructure development, especially for sustainability focused investors. 

Here are 10 key things you should know before investing in the Enviro Infra Engineering Limited IPO:   

1. What makes Enviro Infra Engineering a good opportunity?   

India’s growing focus on sustainable infrastructure has led to a surge in demand for water and wastewater treatment solutions. Enviro Infra Engineering Limited is uniquely positioned to tap into this demand with its extensive experience in constructing and maintaining Water and Wastewater Treatment Plants (WWTPs) and Water Supply Scheme Projects (WSSPs) for government agencies.   

With an order book of ₹1,906 crore spanning 21 ongoing projects, the company is poised for significant growth, especially as India continues to expand its investments in water infrastructure under various government initiatives.   

2.What are the IPO dates, price band, and issue size?   

 Here is the critical information regarding the Enviro Infra Engineering Limited IPO:   

• IPO Dates: November 22– 26, 2024   

• IPO Listing Date: 29th November 2024   

• Price Band: ₹140 – ₹148 per share   

• Total Issue Size: ₹650.43 crore   

• Face Value: ₹10 per share  

• Listing Exchange: BSE, NSE   

• Book Running Lead Managers: Hem Securities Limited 

3.What is the minimum investment for Enviro Infra Engineering Limited IPO?   

  The minimum investment required to apply for Enviro Infra IPO is ₹14,140, and the lot size for this IPO is 101 shares. However, we recommend applying for the IPO at the upper price band to increase your chances of getting the IPO – which is ₹14,948 (101 shares at the lower price band of ₹148).   

4. What does the company do?   

Enviro Infra Engineering Limited specializes in designing, constructing, operating, and maintaining water and wastewater treatment plants across India. They focus on projects like sewage treatment, water supply systems, and common effluent treatment plants.  

The company executes projects on Engineering, Procurement, and Construction (EPC) and Hybrid Annuity Model (HAM) bases.  It has a strong presence in eight Indian states, with completed and ongoing projects of various scales.  The company has completed 28 projects over the last seven years, with an ongoing portfolio of 21 WWTP and WSSP projects worth ₹1,906 crore. 

5.What is the IPO objective?   

Enviro Infra Engineering Limited issue is a combination of fresh issue of 3.87 crore shares aggregating to ₹572.46 crores and offer for sale of 0.53 crore shares aggregating to ₹77.97 crores. This means that of the total money raised through the IPO, ₹77.97 will go directly in the pocket of the shareholders (and not the company), including the promoters. 

The ₹572.46 crores funds raised as fresh issue will be used for:   

• Investment in its subsidiary, EIEL Mathura Infra Engineers Private Limited, for building a 60 MLD STP under the Mathura Sewerage Scheme.   

• Repayment or prepayment of certain borrowings.  

• Working capital requirements.   

• Supporting inorganic growth through acquisitions and general corporate purposes.   

6. How much is the IPO reservation for retail and other investors?   

The Enviro Infra Engineering Limited IPO has allocated: 

• Not more than 50% of the shares for Qualified Institutional Buyers (QIBs). 

• Not less than 15% for Non-Institutional Investors (NIIs). 

• Not less than 35% for Retail Investors.

What are the key strengths and risks of investing in Enviro Infra Engineering Limited IPO?   

  IPO Strengths   

• Diverse Expertise: The company offers tailor-made solutions for STPs based on advanced technologies.   

• Track Record of Timely Execution: Strong in-house design and execution capabilities minimize reliance on third-party consultants.   

• Geographic Presence: A presence in eight states positions the company well to expand into new districts and regions.   

• Sustainability Focus: Initiatives in waste-to-energy highlight its commitment to environmental innovation.   

• Robust Order Book: A pipeline of ₹1,906 crore ensures steady revenue visibility.   

IPO Risks   

• Dependence on Government Projects: Any reduction in budget allocations for water schemes could significantly impact revenue.   

• Workforce Attrition: A 22% attrition rate could disrupt project continuity.   

• High Working Capital Requirements: Variability in project timelines can strain resources.   

• Competitive Bidding: Unsuccessful bids and terminated projects could affect profitability.   

Can you share the financial performance of Enviro Infra Engineering Limited?   

Enviro Infra Engineering Limited’s revenue increased by 116% and profit after tax (PAT) jumped 101% year-on-year for the financial year ending with March 31, 2024. Here’s a snapshot of the company’s recent financials:    

What is the allotment date for Enviro Infra Engineering Limited IPO?   

 The allotment date is scheduled for November 27, 2024, with shares being credited to demat accounts by November 28, 2024. 

Should you invest in Enviro Infra Engineering Limited IPO?   

Enviro Infra Engineering Limited’s robust order book of over ₹1,900 crores, strong execution capabilities, and strategic focus on sustainability present a compelling investment case. However, its reliance on government projects and high working capital needs may pose risks.   

The market capitalization of Enviro Infra Engineers IPO is ₹2,597.84 crores. Investors are advised to carefully evaluate their risk appetite and long-term investment goals before subscribing.   

Enviro Infra Engineering Limited IPO represents an opportunity to invest in a sustainable company contributing significantly to India’s water management infrastructure. Stay informed, assess your investment strategy, and consider diversifying your portfolio.