| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 665 to ₹ 701 | 21 | 19th Dec, 2024 – 23rd Dec, 2024 | ₹ 500.33 Cr |
About Enviro Concord Systems Ltd IPO
Concord Enviro Systems Ltd. (CESL) is a global provider of water and wastewater treatment and reuse solutions. The company designs, manufactures, installs, operates, and maintains industrial wastewater treatment and reuse ZLD (zero liquid discharge) solutions. CESL has a presence in industries such as pharmaceutical, chemicals, food and beverage, defence and offshore, automotive and auto ancillaries, steel, and textiles. It helps companies achieve water security, reduce their water footprint, meet pollution control regulations, and meet their ESG targets. The company boasts in-house capabilities to develop solutions across the entire value chain. The company also offers turnkey solutions, managing every phase of the project from conception to completion. The company generates revenue through the following services they provide: 1) Systems and plants (59.6% of the revenue as of FY24), out of which 97% is contributed by the turnkey solutions and the rest is contributed by the pay-per-use contracts. 2) The sale of consumables and spare parts contributes to 20.8% of the revenue, while its O&M (operating & maintenance) services make a contribution of 19.6%. As of the five-month period ended August 31, 2024, the company’s order book stood at Rs. 5,017.5 million. Of this, 74.5% consisted of system, plant, and module orders, while 25.5% comprised after-sales revenue, including consumables, spare orders, and O&M services orders. As of August 31, 2024, CESL highlighted a customer base of 289 domestic clients and 21 international clients. The customer industry split for revenue (as of 5MFY25) is as follows: Pharmaceuticals – 14.9%, Food & Beverages – 40%, Government – 8.8%, Chemicals – 8.8%, Textiles – 1.8% and Others – 26.8%. The company generated 58.2% of its revenue within India, while 41.8% came from exports (as of FY24). As of August 31, 2024, the company operates two manufacturing facilities: one located in Vasai, Maharashtra, India, and the other in Sharjah, UAE. The company uses its operations in UAE to spearhead its international business. The company develops its solutions through an in-house R&D team comprising 25 employees, which designs industry-specific membranes for its systems and develops new technologies and processes. By August 31, 2024, the company had been awarded four patents in India and had filed nine additional patent applications.
Objective of the Enviro Concord Systems Ltd IPO
The net proceeds of the fresh issue are proposed to be utilised in the following manner:
- Investment in its wholly owned subsidiary, Concord Enviro FZE (“CEF”) for financing its capital expenditure requirements for the greenfield project to develop an assembly unit to assemble systems and plants for treatment of water, wastewater and related membrane modules (the “UAE project”);
- Investment in its wholly owned subsidiary, Rochem Separation Systems (India) Private Limited (“RSSPL”) for financing its capital expenditure requirements for the brown field project to expand the manufacturing facilities, storage and supporting activities (the “Vasai project”);
- Funding capital expenditure requirements of the company for the purchase of plant and machinery;
- Investment in its wholly owned subsidiary, Concord Enviro FZE, for prepayment or repayment, in full or in part, of all or a portion of certain outstanding borrowings availed by Concord Enviro FZE;
- Investment in its wholly owned subsidiary, Concord Enviro FZE, for funding working capital requirements of Concord Enviro FZE;
- Investment in its joint venture, Roserve Enviro Private Limited, to grow its pay per use/pay as you treat business;
- Investment in technology and other growth initiatives for access to new markets; and
- General corporate purposes.
Rationale To Enviro Concord Systems Ltd IPO
Technological leverage and expanding footprint to drive sustainable growth
As an integrated solution provider of industrial wastewater reuse and ZLD solutions with a global presence along with backward integrated manufacturing facilities and O&M service offerings, the company is poised well to benefit from the emerging opportunities in water reuse and ZLD markets in India and globally. The global recycling and reuse wastewater market is experiencing robust growth and is projected to grow at a CAGR of 10.1%, increasing from USD 30 billion in CY23 to USD 48.6 billion in CY28. In order to capitalize on this expected growth in demand for water and wastewater treatment systems and plants, the company is expanding its capacity for the manufacture of membrane modules, WHE modules and containerised plants by building a new assembly unit near the existing facility in Sharjah. The company further plans to leverage its in-house capabilities to address the growing demand for IoT applications in the water and wastewater sector, enhancing wastewater treatment efficiency and industrial water monitoring. By further leveraging its expertise in anaerobic digestion technology, CESL has also, in April 2024, entered into a business initiative for designing and installing CBG plants for its customers, aiming to ride on the industrial tailwinds driven by intensified government efforts. The company also aims to enhance its presence in existing geographies and enter new markets by having dedicated sales and marketing teams whose primary focus will be business development in international markets, particularly in focus geographies. The company plans to seek new partners in its focus markets to establish a local presence, and in certain markets, it may establish subsidiaries or local offices. Additionally, the company will leverage its international installations for marquee customers to showcase its product offerings’ quality and ability to provide O&M services globally. With these strategic initiatives, the company is well-positioned to capitalize on emerging opportunities in the water reuse and ZLD markets, driving sustainable growth and innovation in the industry.
Client-driven leverage helps to effectively expand product offerings
The company boasts a highly diversified customer base across industries and geographies, highlighting a history of high customer retention, deriving a significant portion of its revenue from repeat business built on the successful execution of prior engagements. For the 5MFY24, FY24, FY23, and FY22, the company’s repeat business amounted to Rs. 1,998.1 million, Rs. 4,612.0 million, Rs. 2,695.6 million, and Rs. 2,639.7 million, representing 96.4%, 92.8%, 78.5%, and 80.2% of their revenue from operations, respectively. Additionally, the company has maintained relationships exceeding three years with all its top 10 customers for FY24. The company’s long-term relationships and ongoing active engagements with customers enable it to plan capital expenditure, benefit from increasing economies of scale with stronger purchasing power for raw materials, and maintain a lower cost base. These enduring customer relationships have also facilitated the expansion of its product offerings and geographic reach. The company also aims to cross-sell its new products, such as anaerobic digestors, membrane bio-reactors, sewage treatment plants, waste heat evaporators, ultra-high pressure reverse osmosis systems, and IoT management systems, to its existing customers. Most of these customers have confirmed their need for these products, either for capacity enhancement or to replace existing equipment. By leveraging its diversified customer base and innovative product offerings, the company is poised to successfully meet the evolving needs of its customers and deliver lasting value.
Valuation of Enviro Concord Systems Ltd IPO
Concord Enviro Systems Ltd. (CESL) designs, manufactures, installs, operates and maintains industrial wastewater treatment and wastewater reuse ZLD solutions. The company is poised for growth in the global water reuse and ZLD markets by expanding its manufacturing capacity and leveraging its expertise in advanced technologies. It maintains strong, long-term relationships with a diversified customer base, ensuring significant repeat business. By cross-selling new products and enhancing its international presence, the company is well-positioned to drive sustainable growth and innovation. The company is also poised to benefit from economic tailwinds, as India’s recycling and reuse market, valued at USD 235.5 million, is advancing in sustainable water management solutions. Growth in the wastewater recycling market is driven by innovative technologies, stringent regulations, and significant investments in infrastructure and industrial processes to reuse treated wastewater for agricultural, industrial, and potable purposes. On the financial front, the company has delivered a Revenue/EBITDA/PAT CAGR growth of 22.8%/13.6%/58.6% between FY2022-24. The company’s financial performance has been inconsistent, experiencing a setback in FY23. Its financial inconsistency is further underscored by the negative operating cash flow in FY24. Additional concerns arise from the aggressive dilution of promoter holdings post-listing. We thus recommend an AVOID rating for the issue and will reassess our rating in future following sustained business performance in upcoming quarters.
What is the Enviro Concord Systems Ltd IPO?
Concord Enviro IPO is a book built issue of Rs 500.33 crores. The issue is a combination of fresh issue of 0.25 crore shares aggregating to Rs 175.00 crores and offer for sale of 0.46 crore shares aggregating to Rs 325.33 crores. Login to your account now.
How to apply for the Enviro Concord Systems Ltd IPO through StoxBox?
To apply for the Enviro Concord Systems Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Enviro Concord Systems Ltd IPO open?
Enviro Concord Systems Ltd IPO is opening on 19th December 2024. Apply Now
What is the lot size of the Enviro Concord Systems Ltd IPO?
The Lot Size of Enviro Concord Systems Ltd IPO is 21 equity shares. Login to your account now
When is the Enviro Concord Systems Ltd IPO allotment date?
The allotment Date for Enviro Concord Systems Ltd IPO is 24th December 2024. Login to your account now.
When is the Enviro Concord Systems Ltd IPO listing date?
The listing Date for Enviro Concord Systems Ltd IPO is 27th December 2024. . Login to your account now
What is the minimum investment required for the Enviro Concord Systems Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,721. Login to your account now
What is the maximum investment allowed for the Enviro Concord Systems Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 191,373. Login to your account now
What are the risks associated with investing in the Enviro Concord Systems Ltd IPO?
- The company demonstrates a low capacity utilization rate, which exposes it to higher production costs and lower profitability. Its capacity utilization (as of FY24) for its Vasai plant, which consists of modules and systems, stood at 40.2% and 36.5%, respectively, while for its plant in Sharjah, the utilization rate stood at 30.8%
- The business environment requires various approvals and licenses for smooth operations. The inability to obtain, maintain, or renew such regulatory approvals and licenses may have adverse effects on business operations.
- There are 21 outstanding litigations against the company, promoters, subsidiaries and certain directors.
- There is an outstanding legal proceeding involving the logo of the company. Failure to defend such proceeding successfully may have an adverse effect on business prospects.
When will the Enviro Concord Systems Ltd IPO shares be credited to my Demat account?
The Enviro Concord Systems Ltd IPO be credited to the account on allotment date which is 26th December 2024. Login to your account now
Where can I find the Enviro Concord Systems Ltd IPO prospectus?
The prospectus of Enviro Concord Systems Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Enviro Concord Systems Ltd IPO?
| IPO Open Date | Thursday, December 19, 2024 |
| IPO Close Date | Monday, December 23, 2024 |
| Basis of Allotment | Tuesday, December 24, 2024 |
| Initiation of Refunds | Thursday, December 26, 2024 |
| Credit of Shares to Demat | Thursday, December 26, 2024 |
| Listing Date | Friday, December 27, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on December 23, 2024 |
