Antony Waste Handling Cell IPO – Should you Invest?
Antony Waste Handling Cell IPO Review
This IPO would open for subscription on 4th March, 2020. Antony Waste Handling Cell is engaged in offering Municipal Solid Waste (MSW) Management services. The company is leading MSW Service provider in India and has good future prospects. Should you invest in the Antony Waste Handling Cell IPO? What are the risk factors you should consider before investing in this Antony Waste Handling Cell IPO?
Summary of the article:
Here is the summary of the article:
1) Antony Waste Handling Cell is a niche player in Waste Management Services
2) Antony WHC revenues and margins are consistently improving.
3) Antony IPO came at the wrong time when stock markets are taking huge correction
4) Investors should wait and watch and may subscribe if listed at lower prices than the issue price during such correction.
Let us now go into details now.
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About Antony Waste Handling Cell Limited
They are one of the top five players in the Indian MSW management industry with an established track record of 17 years, providing full spectrum of MSW services which includes solid waste collection, transportation, processing and disposal services across the country, primarily catering to Indian municipalities. They are among the select few who have pioneered in MSW collection and transportation sector We are among the key players in landfill construction and management sector with in-house expertise for landfill construction along with its management. We are also present in the emerging waste management area in India which is MSW based WTE.
Antony Waste Handling Cell IPO – Issue details
IPO opening date: 4-March-2020
IPO closure date: 6-March-2020
Face Value: Rs 5 per share
Issue price band: Rs 295 to Rs 300 per share
Issue size: 206 Crores on upper price band.
IPO Lot size: 50 shares
Minimum investment: Rs 14,750
Leading Managers: Equirus Capital
Listing: BSE / NSE
What are the Objects of the Antony Waste Handling Cell IPO?
Here are the objects of the IPO issue.
1) Offer for Sale (OFS): The object of the Offer for Sale is to allow the selling shareholders to sell equity shares held by them. The company will not receive any proceeds from the Offer for Sale.
2) Fresh Issue: The net proceeds of the Fresh Issue, i.e. Reduction of the consolidated borrowings of our Company by infusing debt in Subsidiary – AG Enviro Infra Projects Private Limited for repayment / prepayment of portion of their outstanding indebtedness and General corporate purposes.
Who are the Company Promoters?
Jose Jacob Kallarakal, Shiju Jacob Kallarakal and Shiju Antony Kallarakkal are the promoters of the company.
How is the company doing in terms of Financial Performance (Reinstated)?
1) Company revenues increased from Rs 291.2 Crores for FY2017 to Rs 298.5 Crores in FY2019. Its revenues for 6 months ended Sep-2019 is Rs 225.6 Crores.
2) Company profits reduced from Rs 41 Crores for the year ended Mar-17 to Rs 34.4 Crores for the year ended Mar-19. It posted Rs 37.8 Crores profit for 6 months ended Sep-2019.
3) Its average diluted EPS in the last 3 years is 13.15 and FY2019 is 12.35. For 6 months ended Sep-2019, its EPS is at 11.3.
What are the key strengths of Antony Waste Handling Cell Limited?
Every investor should understand the company’s key strengths so that they can compare with its competitors to know how unique such company in their business is. Their investment decision would change based on these facts. Here are the key strengths of the Antony Waste Handling Cell.
1) A leading service provider in MSW management sector with end-to-end capabilities.
2) Strong track record of project execution.
3) De-risked business model with diverse portfolio of the projects.
4) Strong base of modern and well-maintained fleet of vehicles.
5) Experienced Promoters and Management Team with Strong Domain Expertise.
What are the various strategies of Antony Waste Handling Cell Ltd?
Company strategies would help investors to know what company is intending to do in the future and whether these strategies would help in revenue or margin growth. Such information would help investors to decide whether to invest for short term, medium term or for the long term. Here are the company strategies.
1) Capitalize on the growth opportunities in the MSW management sector by continued focus on bidding for MSW projects.
2) Continue with the rational selection of projects and strategically expand its geographical footprint.
3) Moving up the MSW value chain by increasing our presence in the emerging waste management areas in India like WTE domain.
4) Continue to focus on enhancing operational efficiency.
Positive Factors to invest Antony Waste Handling Cell IPO
These positive factors can impact company growth, its revenue and margins which can increase its share price. Investors should go through these points and understand these positive factors while investing.
1) Antony Waste Handling Cell AWH is one of the top 5 players in Indian MSW management. It has emerged as a niche player with the latest technologies. Currently it has more than 25 projects under its fold.
3) Consistent margins. It has improved its margins for the 6 months ended Sep-2019.
Major risk Factors to consider before investing in Antony Waste Handling Cell IPO
These risk factors can impact company revenue and margins which would affect its share price. Investors should go through these points and understand these risk factors before investing.
1) They are dependent on municipal authorities for a substantial proportion of its 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 its business, financial condition, and results of operations.
2) MSW projects are typically awarded to them on satisfaction of prescribed pre-qualification criteria and following a competitive bidding process. its business and its financial condition may be adversely affected if new MSW projects are not awarded to them.
3) They depend on a limited number of customers for a significant portion of its revenue. The loss of any of its major customer due to any adverse development or significant reduction in business from its major customer may adversely affect its business, financial condition, results of operations and future prospects.
4) Certain of its Group Companies and Subsidiaries has incurred losses in the preceding three fiscal.
5) They operate in an industry which may require us to have higher working capital. Its inability to meet such working capital requirements may have a material adverse effect on its business, financial condition and results of operations.
6) Its operations include activities that could be hazardous to the health of its employees and other risks which could expose us to material liabilities and increased expenses and negatively impact employee morale.
7) Any increase in or occurrence of its contingent liabilities may adversely affect its financial condition.
8) They have had negative cash flows in the past and may have negative cash flows in the future.
9) There are outstanding legal proceedings involving the company, its Subsidiaries, its Directors and its Promoters.
10) For complete internal and external risk factors, you can refer the RHP of the company.
Antony Waste Handling Cell IPO Schedule
Offer Opens – 4-Mar-2020
Offer Closes – 6-Mar-2020
Finalization of Basis of Allotment – 12-Mar-2020
Unblocking of ABSA and Initiation of Refunds – 13-Mar-2020
Credit of shares to Demat Accounts – 16-Mar-2020
IPO Shares Listing Date – 17-Mar-2020
How is the IPO Priced?
On the upper price band of Rs 300 and the last 3 years average EPS of Rs 13.15, the P/E works out to be 22.8x. Similarly, on the upper price band of Rs 300 and the last year FY19 average EPS of Rs 12.35, the P/E works out to be 24x. Even if we take 6 months ended Sep-2019 EPS of 11.3, P/E works out to be 26.5x. Hence the company is asking the higher price band of Rs 300 in the P/E range of 22.8x to 26.5x. There are no listed peers in same business to compare, hence we cannot ascertain whether the issue price is under priced or overpriced.
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Should you invest in Antony Waste Handling Cell IPO for long term?
Antony Waste Handling Cell is niche and the top player in WMS in India. Its revenues and margins are consistent and improving. Its issue price cannot be determined whether it is under priced or overpriced. Currently stock market is taking huge correction. This IPO came at the wrong time. Investors should wait and watch as such IPO’s would be available at lower prices after listing.
Disclaimer: This article is for educational purpose only. Please consult your investment advisor before you invest in such high risk IPOs.
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Antony Waste Handling Cell IPO Review