The public offer for Antony Waste Handling Cell, one of the top 5 players in the Indian MSW management industry, has been subscribed 3.85 times so far on December 22, the second day of bidding.
The Rs 300 crore public issue has received bids for 2.56 crore equity shares, higher by 3.85 times compared to IPO size of 66.66 lakh equity shares (excluding anchor book), the subscription data available on the exchanges showed.
The portion set aside for retail investors has seen subscription of 7.2 times, while the reserved portion of non-institutional investors has been subscribed 27.9 percent and that of qualified institutional buyers 64 percent.
Antony Waste primarily undertakes municipal solid waste (MSW) collection & transportation (C&T) projects, MSW processing projects and mechanized sweeping projects.
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It has an established track record of 19 years primarily catering to Indian municipalities. As on date they have undertaken more than 25 projects out of which 18 are ongoing comprising 12 MSW C&T projects, 2 MSW processing projects and 4 mechanised sweeping projects.
As of November 15, 2020, they had a fleet of 1,147 vehicles, of which 969 were equipped with GPS technology. They procure the components of its vehicles mostly from leading international suppliers including from Compost System GmbH.
The company launched its initial public offering on December 21, which was subscribed 1.97 times on Day 1.
The public offer consists a fresh issue of Rs 85 crore and an offer for sale of Rs 215 crore shares by existing shareholders. The price band has been fixed at Rs 313-315 per share.
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"We see business apprehensions on high revenue dependency on 5 municipal authorities as a large proportion of the company's revenue comes from them which accounts for 82 percent FY20. So any contracts here and there will impact Antony financials adversely," Mehta Equities said.
Considering the macros of the sector, demanded valuations and concerns on the receivables, Choice Broking also assigned a 'subscribe with caution' rating for the issue.
As there are on listed peers having similar business operations like Antony Waste, the brokerage has taken global peers for valuation benchmarking.
"At the higher price band of Rs. 315 per share, the company's share is valued at a P/E multiple of 26.1x (to its restated TTM EPS of Rs. 12.1), which is at discount to the peer average of 32.7x. One of its global peers, Waste Management Inc has acquired Advanced Disposal Services Inc at an enterprise value of $4.9 billion. The deal was valued at EV/sales multiple of 3x and EV/EBITDA multiple of 12.1x. Considering these transaction multiples, the valuation demanded by Antony Waste seems to be attractive," Choice Broking explained.
In March this year, Antony Waste Handling Cell had launched Rs 206 crore IPO but had received tepid investor response amid extremely weak markets, and as a result, it failed to sail through.
The company will utilise net proceeds from the fresh issue for part-financing its WTE project for the PCMC, lowering consolidated borrowings, and general corporate purposes.
Promoters’ shareholding will be reduced to 46.23 percent post issue from 51.1 percent currently.