Antony Waste Handling Cell, the municipal solid waste (MSW) management company, is all set to debut on bourses on January 1, 2021. The company has fixed the final issue price at Rs 315 per share, the upper end of the price band of Rs 313-315, after closing the Rs 300-crore public offer last week. The initial public offering (IPO) was subscribed 15 times.
Given its leadership in solid-waste handling, strong track record of project execution and a good response to IPO, the listing premium is expected to be more than 30 percent over the issue price, experts said.
Antony Waste shares are trading in the range of Rs 415-435, a 30 percent premium in the grey market compared to the issue price.
The grey market is an unofficial trading platform where shares get traded well before the allotment in the IPO and listing on bourses.
"We are expecting Antony Waste to list at a premium of 30 percent or more to issue price," said Astha Jain, Senior Research Analyst at Hem Securities, who is positive on the company with the long-term perspective.
Antony Waste is one of the top five players in the Indian MSW management industry with an established track record of 19 years, providing a full spectrum of services, which includes solid-waste collection, transportation, processing and disposal services across the country.
Prashanth Tapse, AVP Research at Mehta Equities, also expects a decent 30 percent plus premium listing, though Antony Waste couldn't attract investors' interest when compared to recent IPOs (Mrs Bectors Food & Burger King) because of a lack of confidence in the business growth on the back of high revenue dependency from limited five municipal authorities which accounts for 82 percent FY20. "So any contracts here and there will impact Antony financials adversely," Tapse said.
The major risk analysts pointed out is the dependency of the company on municipal authorities for a substantial proportion of business and revenue. "Many municipalities have been struggling to fund various solid-waste management projects from their own revenue receipts and are highly dependent on state/central grants/budget allocation. Any decline in the budgetary allocation towards MSW projects will have a material adverse impact on company’s business, financial condition, and results of operations," Jain said in her IPO report.
All its 18 ongoing projects have started generating revenue including Municipal Corporation of Greater Mumbai, the Navi Mumbai Municipal Corporation, the Thane Municipal Corporation, Pimpri Chinchwad Municipal Corporation, the North Delhi Municipal Corporation and the Mangaluru Municipal Corporation.
The company registered a revenue growth at a CAGR of 18 percent for FY18-FY20 from Rs 276 crore to Rs 451 crore, driven by contribution from new projects in Pimpri Chinchwad and Nagpur, while profit grew at a 16 percent CAGR during the same period. The company enjoyed EBITDA margin and PAT margin of 25 percent and 14 percent, respectively, in H1FY21.
"The long-term nature of projects (ranging from 5-25 years) gives visibility for consistent revenue generation in future. However, dependency on municipal orders can impact its working capital cycle," said Geojit.
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