Should You Subscribe To Antony Waste Handling Cell IPO?

To tap the strong market momentum, Antony Waste Handling Cell, a municipal solid waste (MSW) management company, has once again hit the primary market with its IPO to raise Rs. 300 crore. Earlier, it made an offer in March this year when there was across the globe panic selling in equities amid coronavirus pandemic. The previous Rs. 206 crore issue was offered in the Rs. price band of Rs. 295-300 but was withdrawn due to tepid response despite lowering the price band and extending the IPO deadline.

Now, amid IPO buzz this year with record subscriptions and stellar listing gains for most of the companies that floated their offer, here is experts take on the issue of Antony Waste Handling Cell:

1. Issue details:

• Issue size: Rs. 300 crore
• Price band- Rs. 313- Rs. 315

The issue comprises fresh issuance worth Rs. 85 crore and the remaining OFS by existing shareholders of the company worth Rs. 215 crores.

Minimum bid size: 47 equity shares and in multiples of 47 equity shares thereafter.

This translates to an investment of Rs. 14805 per lot.

Post the offer, promoter shareholding shall come down to 46.23% from 51.10%. Public shareholding in the company will increase to 53.77% from 48.90% earlier.

Share allotment as per brokerages will likely be finalized by December 29, 2020, while it may be listed on the bourses on January 1.

From anchor investors, the company mopped a sum of Rs. 90 crore ahead of its IPO. Among 10 anchor investors in the firm are Massachusetts Institute of Technology, Tata AIG General Insurance Company Ltd, SBI Equity Savings Fund and SBI Infrastructure.

Equirus Capital and IIFL Securities are the book running lead managers to the issue.

2. Issue objective:

The proceeds from the fresh issuance will be put towards part financing waste-to-energy project at Pimpri Chinchwad, Maharashtra via investment in subsidiaries (AG Enviro and/or ALESPL), cutback on consolidated borrowings of the company and general corporate purpose.

3. Financials:

Over the last three fiscal years from FY 17-20, the company logged a 17.5% CAGR growth in consolidated revenue to Rs. 4,505.1 million in FY20. In FY20, EBITDA grew by 24.7% CAGR to Rs. 1255.6 million. EBITDA margin also increased over the period and was at 27.9 percent in FY20.

4. Should you subscribe to Antony Waste Handling Cell IPO?

"At the upper price band of Rs.315, Antony Waste Handling Cell is available at P/E of 15x on FY21E EPS. Valuation looks attractive, considering healthy margins, improving revenue generation and increasing relevance of waste management. Hence, we recommend ‘SUBSCRIBE' to the issue with a long-term perspective," Geojit Financial Services said in a note.

Another brokerage Choice Broking has a ‘Subscribe with caution' rating on the IPO given the macros of the sector, concerns regarding receivables and demanded valuations.

Angel Broking has a ‘Neutral' call on the IPO of Antony Waste, valuing the business at a P/E of 11.5x on FY20 basis. "For Antony Waste Handling Cell to grow its business it needs to win new contracts from municipalities. The top 5 clients contributed 81.8% of the revenue of the fiscal year 2020. So in the future if a company is not able to win an existing major contract again, it will impact the financials adversely," said the analyst at the firm.

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