Concord Enviro IPO: ₹500 Crore Opportunity to Clean Up Your Portfolio

Concord Enviro IPO opens on December 19th

The Concord Enviro Systems Limited IPO is set to open for subscription on December 19, 2024, and will close on December 23, 2024. The company aims to raise ₹500.33 crore through a combination of a fresh issue of 0.25 crore shares (₹175 crore) and an offer for sale (OFS) of 0.46 crore shares (₹325.33 crore).

Key Details:

• Price Band: ₹665 to ₹701 per share
• Minimum Bid Lot: 21 shares
  • Retail Investors: Minimum investment of ₹14,721
  • Small Non-Institutional Investors (sNII): Minimum 14 lots (₹2,06,094)
  • Big Non-Institutional Investors (bNII): Minimum 68 lots (₹10,01,028)
• IPO Timeline:
  • Allotment Date: December 24, 2024
  • Listing Date: December 27, 2024, on BSE and NSE

Company Overview:

Established in 1999, Concord Enviro Systems specializes in water and wastewater treatment, including zero-liquid discharge (ZLD) technologies. With a global presence, the company provides sustainable water reuse solutions across industries.

Use of IPO Proceeds:

1. Greenfield Project: Funding Concord Enviro FZE’s assembly unit in the UAE for water treatment systems and membrane modules.
2. Facility Expansion: Expanding manufacturing capacity at the Vasai plant through Rochem Separation Systems (India) Pvt. Ltd. (RSSPL).
3. Capital Expenditure: Purchasing plant and machinery.
4. Debt Repayment: Repaying borrowings for Concord Enviro FZE.
5. Working Capital: Supporting operational needs of Concord Enviro FZE.
6. Joint Venture Investment: Investing in Reserve Enviro Private Ltd. to support its pay-per-use business model.
7. Growth & Technology: Developing new technologies and entering new markets.
8. General Corporate Purposes.

Lead Managers and GMP:

The book-running lead managers are Motilal Oswal Investment Advisors Ltd. and Equirus Capital Pvt. Ltd., while Link Intime India Pvt. Ltd. is the IPO registrar. As of December 17, 2024, the grey market premium (GMP) was ₹0, maintaining an estimated listing price of ₹701.

Concord Enviro IPO: ₹500 Crore Opportunity Concord Enviro Systems Ltd, a global provider of water and wastewater treatment solutions, will open its initial public offering (IPO) for subscription from December 19 to December 23, 2024, to raise ₹500.33 crore. The offering includes a fresh issue of shares worth ₹175 crore and an offer-for-sale (OFS) of 46 lakh shares by existing shareholders. The company has proposed to list its shares on BSE and NSE on December 27, 2024.

Key IPO Details

• Offer Size: ₹500.33 crore
• Price Band: ₹665 to ₹701 per share
• Minimum Lot Size: 21 shares (₹14,721 investment for retail investors)
• Subscription Period: December 19 to December 23, 2024
• Allotment Date: December 24, 2024
• Listing Date: December 27, 2024

Business Model

Concord Enviro IPO: ₹500 Crore Opportunity Concord Enviro Systems specializes in water and wastewater treatment solutions, including zero liquid discharge (ZLD) technology. The company manages the entire value chain, offering design, manufacturing, installation, commissioning, operation and maintenance (O&M), and digitalization solutions using Internet of Things (IoT).

Revenue streams include:

1. Sale of systems and turnkey plants (e.g., effluent treatment plants, membrane bioreactors, sewage treatment systems).
2. Operation & maintenance (O&M) services for installed plants.
3. Exporting solutions to regions like North America, Latin America, Africa, the Middle East, and Southeast Asia.

The company serves over 310 clients globally, including prominent names like Diageo Mexico Operaciones and AB Mauri.

Financial Performance

The company has demonstrated strong growth over recent years:

Concord Enviro IPO: ₹500 Crore Opportunity In FY23, Concord Enviro Systems reported a revenue of ₹343.21 crore, which grew significantly to ₹496.85 crore in FY24. Profit Before Tax (PBT) also saw substantial improvement, rising from ₹7.55 crore in FY23 to ₹43.99 crore in FY24. The Profit After Tax (PAT) increased from ₹5.48 crore in FY23 to ₹41.43 crore in FY24.

For the period April to August FY25, the company recorded a revenue of ₹206.17 crore, with a Profit Before Tax of ₹82.5 lakh and a Profit After Tax of ₹51.6 lakh.

Key Financial Ratios

• Return on Equity (RoE): 13.73%
• Return on Capital Employed (ROCE): 14.07%
• Debt-to-Equity Ratio: 0.47
• PAT Margin: 8.34%

Strengths

1. Leading player in ZLD technology with a strong global market presence.
2. Integrated operations with backward manufacturing capabilities, ensuring cost efficiency.
3. Diversified customer base across industries and geographies.
4. Strong international presence across 14+ countries, including Asia, Africa, and Europe.

Weaknesses

1. High revenue dependence on the top 10 customers (over 50%).
2. Risk of order cancellations or adjustments affecting future revenues.
3. Dependence on manufacturing facilities in Vasai (India) and Sharjah (UAE).
4. Does not own all premises used for its operations and proposed assembly unit.

Key Competitors

• Praj Industries
• Triveni Engineering
• Ion Exchange
• VA Tech Wabag
• Thermax

Order Book

• Total Order Book as of August 31, 2024: ₹501.74 crore
• Fiscal 2024 Order Book: ₹463.19 crore

Concord Enviro Systems IPO: Key Details, GMP, Dates, and Business Overview

Overview of Concord Enviro Systems
Concord Enviro IPO: ₹500 Crore Opportunity Concord Enviro Systems is a prominent global provider of water and wastewater treatment solutions, including Zero Liquid Discharge (ZLD) technology. The company specializes in customized turnkey solutions for effluent treatment plants, sewage treatment plants, anaerobic digestors, membrane bioreactors, and membrane-based systems such as ultrafiltration (UF), nanofiltration (NF), reverse osmosis (RO), desalination, and waste heat evaporators (WHE). Additionally, it offers comprehensive operation and maintenance (O&M) services, including the supply of spare parts and consumables.

The company has a strong international presence, exporting its solutions to North America, Latin America, Africa, the Middle East, and Southeast Asia. As of FY24, Concord Enviro Systems served 353 domestic and 24 international clients across industries such as pharmaceuticals, chemicals, food & beverages, energy, steel, automotive, and textiles.

The company operates manufacturing facilities in Vasai, Maharashtra, and Sharjah, UAE, and has an Order Book worth ₹4.63 billion as of March 31, 2024, comprising system/plant orders and after-sales services.

Concord Enviro Systems IPO Details

• IPO Dates: December 19, 2024 – December 23, 2024
• Price Band: ₹665 – ₹701 per share
• Fresh Issue: ₹175 crore
• Offer for Sale (OFS): 46,40,888 shares (worth ₹308.62 – ₹325.22 crore)
• Total IPO Size: ₹483.62 – ₹500.22 crore
• Lot Size: 21 shares (minimum investment ₹14,721)
• Face Value: ₹5 per share
• Listing: NSE and BSE
• Retail Investor Allocation: 35%

Financial Performance (₹ Crore)

Concord Enviro Systems has shown a fluctuating yet improving financial performance:

Concord Enviro IPO: ₹500 Crore Opportunity In FY22, the company recorded a revenue of ₹329.37 crore, which increased slightly to ₹343.22 crore in FY23. By FY24, revenue saw a notable jump to ₹496.86 crore.

Expenses remained in line with revenue, rising from ₹319.88 crore in FY22 to ₹343.30 crore in FY23 and ₹467.57 crore in FY24.

Net profit experienced a significant variation, standing at ₹16.48 crore in FY22, dropping to ₹5.49 crore in FY23, and then rebounding strongly to ₹41.44 crore in FY24.

The profit margin improved as well, moving from 5.00% in FY22 to 1.60% in FY23, and surging to 8.34% in FY24.

For the first five months of FY25, revenue reached ₹206.17 crore, while expenses totaled ₹206.56 crore. The net profit for this period stood at ₹0.52 crore, with a profit margin of 0.25%.

Valuations and Ratios

Concord Enviro Systems’ financial ratios reflect improving performance:

• Earnings Per Share (EPS):
  EPS decreased from 9.05 in FY22 to 3.01 in FY23 but rebounded to 22.77 in FY24 (pre-issue) and adjusted to 20.02 post-issue.
• Price-to-Earnings (PE) Ratio:
  The PE ratio for FY24 ranges between 29.21–30.79 pre-issue and is projected at 33.22–35.01 post-issue.
• Return on Net Worth (RONW):
  RONW stood at 6.18% in FY22, dipped to 1.97% in FY23, and improved to 12.92% in FY24.
• Return on Capital Employed (ROCE):
  ROCE dropped from 10.23% in FY22 to 6.96% in FY23, then recovered to 14.07% in FY24.
• Debt-to-Equity Ratio:
  The company’s debt-to-equity ratio remained stable at 0.47 across FY22, FY23, and FY24.

IPO Objectives
Concord Enviro IPO: ₹500 Crore Opportunity The funds raised from the fresh issue will be utilized for:

1. Capital expenditure for a greenfield assembly project in UAE.
2. Expanding manufacturing facilities in Vasai, Maharashtra.
3. Purchase of plant and machinery.
4. Repayment or prepayment of outstanding borrowings.
5. Funding working capital needs of subsidiaries.
6. Growth initiatives in technology and market expansion.
7. General corporate purposes.

Peer Comparison

Concord Enviro IPO: ₹500 Crore Opportunity Concord Enviro Systems’ performance relative to its peers is as follows:

• Concord Enviro Systems:
  • PE Ratio: 35.01
  • EPS: 22.77
  • RONW: 12.92%
  • NAV: ₹177.23
  • Revenue: ₹496.86 crore

• Praj Industries:
  • PE Ratio: 50.42
  • EPS: 15.42
  • RONW: 22.24%
  • NAV: ₹69.35
  • Revenue: ₹3,509.78 crore

• Ion Exchange (India):
  • PE Ratio: 41.80
  • EPS: 16.53
  • RONW: 19.24%
  • NAV: ₹86.15
  • Revenue: ₹2,391.73 crore

• Triveni Engineering:
  • PE Ratio: 24.99
  • EPS: 18.05
  • RONW: 13.80%
  • NAV: ₹132.51
  • Revenue: ₹5,220.09 crore

IPO GMP and Subscription

• GMP (Grey Market Premium): To be updated.
• Subscription Status: Live updates will be provided once the IPO opens.

Key Dates

• IPO Opening Date: December 19, 2024
• IPO Closing Date: December 23, 2024
• Basis of Allotment: December 24, 2024
• Refund Initiation: December 26, 2024
• Shares in Demat Account: December 26, 2024
• Listing Date: December 27, 2024

Lead Manager and Registrar

• Lead Manager: Equirus Capital Pvt. Ltd.
• Registrar: Link Intime India Pvt. Ltd.

Investor Note
Concord Enviro IPO: ₹500 Crore Opportunity Concord Enviro Systems’ IPO is supported by a robust business model with a focus on industrial wastewater solutions, strong growth in revenue, and expanding global operations. However, investors should consider the company’s reliance on a few key customers and potential risks of order cancellations before subscribing.