Concord Enviro Systems shares list at 19% premium; should you book profits or hold?

Analysts recommend a cautious approach for investors for Concord Enviro Systems IPO investors.

Concord Enviro Systems shares jumped nearly 19 percent in market debut trade on Friday against the issue price of Rs 701. The stock listed at Rs 832, reflecting a surge of 18.68 percent from the issue price on the BSE. It further soared 21.18 per cent to Rs 849.50.

At the NSE, shares of the firm began the trade at Rs 826, a jump of 17.83 per cent.

Analysts recommend monitoring the stock closely post-listing, with a preference for booking profits if a premium is achieved.

Mumbai-based Concord Enviro Systems raised Rs 500 crore through its IPO, which closed on December 23 with a 10.67 times subscription. The issue was priced at Rs 480-500 per share and included a fresh issue of Rs 175 crore and an offer-for-sale of Rs 325.3 crore. Proceeds from the fresh issue will be used for a greenfield project in the UAE, a brownfield expansion in Vasai, debt repayment, and working capital needs.

Concord Enviro Systems listing expectations: Book profits

Narendra Solanki, Head of Fundamental Research at Anand Rathi Shares, suggests holding Concord Enviro Systems stock for the long term, citing the company’s capabilities in water and wastewater treatment, including zero liquid discharge (ZLD) technology. "While the issue is valued at a P/E of 35.01x and EV/EBITDA of 22.1x, its return on net worth of 12.92 percent is moderate. We recommend holding the stock with a long-term view," he said.

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Sagar Shetty, Research Analyst at StoxBox, sounds caution due to Concord Enviro’s inconsistent financial performance and aggressive dilution of promoter holdings. "Negative operating cash flow in FY24 and subdued investor confidence reflected in the low GMP suggest caution. Investors allocated shares should consider booking profits on listing gains and monitor future performance closely," he advised.

Concord Enviro Systems financial performance and growth outlook

Concord Enviro Systems reported a 655.2 percent on-year increase in net profit at Rs 41.4 crore for FY24, though its profitability in FY23 was inconsistent, with a 66.7 percent decline compared to FY22. Revenue rose 44.8 percent to Rs 497 crore in FY24, but the company’s operating cash flow and past profit fluctuations underscore the need for careful evaluation. The company’s projects, including expansions in the UAE and Vasai, aim to enhance its global footprint and operational efficiency.

Analyst views

Given the mixed signals in financial performance and valuation metrics, analysts recommend a cautious approach for investors. Concord Enviro Systems IPO allottees are advised to book profits if the listing sees gains, while those with a long-term view may hold the stock while closely monitoring its performance in subsequent quarters.

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