Antony Waste handling cell is one of the top five players in
the MSW management industry, 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
primarily undertake MSW collection and transportation projects, MSW processing
projects and mechanized sweeping projects.
Dates: March 04 to March 06, 2020
Price Band: Rs. 295 to Rs. 300 per share
Minimum Lot: 50 shares
Total Issue Size: Up to Rs. 206 Crs (Fresh issue Rs. 35 Crs
and OFS Rs. 171 Crs)
Objects of the Offer
The proceeds from the fresh issue will be used for Reduction
of the consolidated borrowings of the Company by infusing debt in their
Subsidiary - AG Enviro Infra Projects Private Limited for repayment /
prepayment of portion of their outstanding indebtedness. Offer for Sale will
not form part of the Net Proceeds.
Business and Financial Overview
The company is one of the top 5 players in Municipal Solid
Waste management industry with a track record of 17 years. It provides services
such as solid waste collection of solid waste form households restaurant,
transportation, processing and disposal services to Indian municipalities. The
company is a key player in landfill construction and management sector as well. 55%
of its revenues are derived from the transportation and collection segment
while the balance is derived from the processing segments.. Major clients
for the company include various municipal corporations of delhi, Mumbai, thane,
Nagpur among others. The company has undertaken more than 25 projects of
which 17 are ongoing.
Looking at the financials, the company has delivered poor growth over the last 3 years in terms
of Revenue as well as Profits. Although this growth is expected to kick in
as some undertaken projects begin in full swing. The company requires high
working capital to run their business and has negative cash flows. From FY17 to
FY19, the company’s EBITDA increased from Rs 802.41 million to Rs 910.05
million, representing a CAGR of 6.50%. Net worth for Fiscals 2017, 2018 and
2019 was 35.74%, 24.48% and 18.10%, respectively. The company has a debt to
equity ratio of 1.06.
Urbanization is a critical factor driving the MSW generation
in the country. Changing lifestyle patterns, increasing disposable incomes,
have paved way for consumerism and, have also contributed to waste generation
in urban India. MSW generation is expected to grow at a CAGR of 5% (FY 2018-23)
from 55 Million TPA in FY 2018 to reach 70 Million TPA by FY2023. The MSW
Management market is estimated at INR 30,000 Million for FY2018 and is expected
to reach INR 62,000 Million by FY 2023 at a CAGR of 15.6%. Increasing
participation of professional players in collection and transportation services
and development of scientific recycling and disposal methods for management of
MSW is expected to be key driver for the market.
To tackle the growing menace arising out of waste
generation, the Government has initiated several schemes at central, state, and
local levels. Focused attention toward development of urban infrastructure
received a boost with the implementation of Swachh Bharat Mission (Urban) entailing
an investment of ₹ 620.1 Billion. This has been a key boost to the industry.
The company is dependent on municipal authorities for their
revenues. Municipalities are inturn dependent on state budget allocations. Any
decline in budget allocation will have a material impact on the business.
The company depends on a limited number of customers for a
significant portion of their revenue. Top five clients contributed to over 90%
of their total revenue. Therefore the company has a high concentration risk.
The waste management industry is also very competitive with
20-30 players providing similar services. There are also various local
participants such as transport companies and small firm. Therefore the industry
is highly competitive.
The company is valued at a price to earnings multiple of Rs
13 per share. There are no other listed players in the Municipal Solid waste
management industry in India. Overall the company has strong growth
opportunities but The IPO dates clashing with that of the SBI Cards IPO coupled
with the volatility around the coronavirus are key negatives currently. Therefore we suggest our clients to NOT
subscribe in this IPO. One can keep the stock in their watchlist and take
positions depending on the performance in the future.
Watch this video to know what our research analyst recommends about this 200cr IPO
Source: RHP filed with RoC