EMS Limited, previously known as EMS Infracon, is gearing up for an IPO that is set to open for subscription on September 8, 2023. As a key player in the water and wastewater management sector, EMS Limited’s IPO has attracted significant attention from investors. In this article, we will provide you with a detailed overview of the EMS IPO, including key dates, positive and negative factors, and a comprehensive review to subscribe or not.
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EMS IPO Details
| IPO Opening Date | 08-Sep-23 |
| IPO Closing Date | 12-Sep-23 |
| IPO Listing Date | 21-Sep-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 10 per equity share |
| IPO Price band | Rs 200 to Rs 211 per equity share |
| Lot Size | 70 Shares |
| Min Order Quantity | 70 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 321.24 Crores |
| Fresh issue | Rs. 146.24 Crores |
| OFS | Rs. 175 Crores |
EMS Limited Financials (Restated Consolidated)
| Financial Year ending / Period ending (Amt in Crores) | ||||
| Particulars | FY20 | FY21 | FY22 | FY23 |
|---|---|---|---|---|
| Assets | 308.08 | 378.31 | 502.55 | 641.41 |
| Revenue | 332.36 | 336.18 | 363.10 | 543.28 |
| Profit After Tax | 72.43 | 71.91 | 78.93 | 108.85 |
| Net Worth | 229.99 | 301.91 | 380.18 | 487.83 |
| Reserves and Surplus | 218.24 | 290.16 | 368.43 | 443.45 |
| Total Borrowing | 14.80 | 3.16 | 3.71 | 45.40 |
IPO Objects of EMS the IPO
The objects of the IPO issue contains both Offer for Sale (OFS) and fresh issue.
- Under OFS, the amount goes to selling share holders.
- Fresh issue would be used for the following objectives:
- Funding of working capital requirements of the company; and
- General corporate purposes.
EMS IPO Price Valuation
To assess the valuation of the EMS Limited IPO, let’s consider key financial indicators.
- EMS IPO price band is Rs 200 to 211 per share
- If we consider last year FY23 EPS of Rs 23.15, P/E ratio works out to be 9x
- If we consider Last 3 Years Weighted EPS of Rs 42.54, P/E ratio works out to be 5x
- The only listed peers like VA Tech Wabag trading at P/E 14x. While it might not be appropriate to compare with only one company, the IPO Price band at P/E of 9x to 5x is attractively-priced.
EMS IPO GMP Today
EMS Limited IPO GMP is between Rs 100 to Rs 120 as indicated on various websites, however all these are not through authentic sources.
EMS IPO – Why to invest in this IPO?
- Diverse Portfolio: EMS Limited is engaged in the business of providing a wide range of water and wastewater management services, including Sewerage solutions, Water Supply Systems, Water and Waste Treatment Plants, Electrical Transmission and Distribution, and more. This diverse portfolio enhances the company’s potential to serve various government authorities and bodies.
- Strong Track Record: EMS Limited has a history of successfully operating and maintaining multiple projects, including WWSPs, WSSPs, STPs, and others, across five states. This demonstrates the company’s experience and competence in the sector.
- Experienced Team: The company has its own civil construction team and employs over 57 engineers, supported by third-party consultants and industry experts. This experienced workforce can contribute to the efficient execution of projects.
- Reasonable P/E Ratio: With a P/E (Price-to-Earnings) ratio of 9x, EMS Limited’s IPO appears reasonably priced compared to its market cap. This valuation could be attractive to potential investors.
EMS IPO Risk Factors
- Legal Proceedings: The company, its promoters/director, and group companies are currently involved in certain legal proceedings. Adverse outcomes in these legal matters could significantly impact the company’s business, financial condition, and results of operations.
- Past Blacklisting: The company has faced blacklisting in the past, which can raise concerns about its reputation and ability to secure future projects.
- Penalty Clauses: Most of the agreements related to the company’s business contain penalty clauses or liquidated damages for project completion delays. This poses a financial risk if projects are not completed on time.
- Dependency on Government Contracts: EMS Limited primarily derives its revenues from contracts awarded by government authorities/bodies, often funded by the World Bank through Central and State Governments. Any reduction in budget allocation to this sector may affect the number of projects available for bidding, impacting the company’s business.
- Technology Adaptation: The company relies on traditional technologies for the design and installation of wastewater treatment and water supply projects. Inability to adapt to new technologies or changing government requirements could affect the company’s ability to bid for such projects.
- Competitive Bidding: The company competes for projects through competitive bidding processes conducted by government authorities. Failure to qualify, compete, or win future projects may adversely affect the company’s business and financial performance.
- Capital-Intensive Industry: The industry in which EMS Limited operates is capital-intensive and involves relatively long gestation periods for project execution. The company requires substantial financing for its operations, and the inability to secure additional financing on favorable terms could impact its growth and profitability.
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EMS IPO Review – Should you invest or avoid?
EMS Limited IPO presents a promising opportunity in the water and wastewater management sector. With diversified portfolio and strong track record, EMS IPO share price comes with attractive valuations.
Investors should look at the complete risk factors including company got blacklisted in the past, dependency on govt contract etc.,
High Risk Investors can invest in such IPO with medium to long term perspective.
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