EMS Limited IPO: Check Issue Size, Date and Price Band
Introduction:
Here’s some good news for IPO investors! A wastewater and sewage treatment company – EMS Limited – plans to raise Rs. 321.24 crores through its IPO, which opens for public subscription on 6 September 2023. The IPO already demands a robust grey market premium (GMP) as per the initial indications. Keep reading to know the details of the EMS Limited IPO and decide whether to invest in it.
About EMS Limited IPO:
EMS Limited, formerly known as EMS Infracon, provides wastewater and sewage collection, treatment, and disposal services for government authorities and municipal bodies. The company's service portfolio includes water supply systems, sewerage solutions, water and waste treatment plans, electrical transmission and distribution, road and allied works, water supply projects, and wastewater scheme projects.
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The company has a civil construction team with more than 57 engineers. As of July 2023, the company had 18 ongoing projects with a total order book of Rs. 1,775 crores. These projects included WWSPs, WSSPs, STPs, and HAMs.
Strengths of EMS Limited IPO:
- In-house designing, engineering, and civil construction team, thereby reducing the dependence on third-party talent suppliers
- Strong execution capabilities with high industry experience
- Expertise in delivering high-quality services in a cost-effective and timely manner
- Uses traditional as well as modern technologies in the construction and installation of WWSP and WSSP
- Derives its revenue from the World Bank through local state government authorities and municipal bodies
- A strong order book of Rs. 1,775 crores (as of July 2023)
Key risks or weaknesses of EMS Limited IPO:
- Business is highly dependent on central and state governments. Any reduction in support or budgetary allocation may have adverse effects
- Has been involved in certain legal proceedings. Two government bodies have even blacklisted the company
- Most agreements come with penalty clauses. Failure to execute projects on time may result in harsh penalization
- The order book doesn’t reflect the company’s actual income
Financial Snapshot of EMS Limited IPO:
Reading a company’s financials before investing in its IPO is crucial.
Below are EMS Limited's financials for the last three fiscal years. All data is as per the company’s Draft Red Herring Prospectus (DRHP) dated 1 September on the SEBI website:
| Particulars | As of and for FY Ending March 31 | ||
| 2023 | 2022 | 2021 | |
| Share Capital | 47 | 12 | 12 |
| Net Worth | 488 | 380 | 302 |
| Total Borrowings | 45 | 4 | 3 |
| Revenue From Operations | 538 | 360 | 331 |
| EBITDA Adjusted | 149 | 113 | 99 |
| Profit After Tax | 109 | 79 | 72 |
| Earnings Per Share (Diluted) | 23 | 67 | 61 |
| Net Asset Value (In Rs/share) | 104 | 324 | 257 |
| Return on Net Worth | 22% | 21% | 24% |
| Return on Capital Employed | 28% | 30% | 34% |
*Amount in Crores
A few takeaways from the financials of EMS Ltd. as seen in the table above include:
The share capital is robust only for the latest financial year. It was flat for the two preceding years.
The company's net worth has expanded by more than 150% from Rs. 302 crores in FY21 to Rs. 488 crores in FY23.
The revenue and profit have also grown equally in the last two financial years.
The total borrowings have increased suddenly from Rs. 4 crores to Rs. 45 crores in the latest financial year.
The profitability and earning ratios are pretty impressive.
Details of the IPO EMS Limited IPO:
| IPO Date | 8 Sept to 12 Sept 2023 |
| Listing Date | 21-Sep-23 |
| Face Value | Rs 10 per share |
| Price Band | Rs 200 to Rs 211 per share |
| Lot Size | 70 shares |
| Total Issue Size | Rs 321.24 crores |
| Fresh Issue | Rs 146.24 Cr |
| Offer for Sale | Rs 175.00 Cr |
| Issue Type | Book-built IPO |
The final word:
Considering the company's steady growth and attractive valuation, subscribing to the EMS Limited IPO isn’t a bad idea. The company has several factors in its favor than the ones against it. As per the current grey market trends, the shares can list at a premium of around 50%. If you are open to moderate risks, you can stay invested long-term.
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