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  • Writer's pictureJatin Agarwal

EMS IPO


EMS Logo

Company and IPO Overview:


EMS Limited is a leading infrastructure solutions provider specializing in sewerage systems, water supply, waste treatment, electrical transmission, and road construction. They actively engage in government tenders and maintain a self-reliant in-house team of engineers to ensure compliance with quality and industry standards.


The company is self-reliant in every aspect of its business with full credit to an in-house team for designing, engineering, and construction. In order to assure compliance with and adherence to the quality standards established by the industry and government agencies & departments, it also has a team of 61 engineers who are assisted by outside consultants and industry experts.

As of March 24, 2023, EMS is managing and operating 13 projects, comprising waste water scheme projects (WWSPs) and water supply scheme projects (WSSPs), Sewage Treatment Plants (STPs), and HAM, totaling Rs.1,38,909.00 lakhs and 5 O&M projects, totaling Rs. 9,928.00 lakhs as of February 28, 2023, i.e. unbilled amount. These projects are located across five states.


EMS IPO is about to raise around ₹ 321.24 crores via IPO comprising Fresh Issue of ₹ 146.24 crores and Offer For Sale upto ₹ 175 crores. The price band of the issue is ₹ 200 to ₹ 211 with a minimum market lot of 70 shares. EMS IPO subscription quota for retail is 35.00%, NII is 15.00% and QIB is 50.00%.


Financials (rounded off):

Date

Total Revenue (₹ in cr)

​​​PAT (₹ in cr)

​31/03/2021

336

72

31/03/2022

363

79

31/03/2023

543

109


Objectives of the Issue:

1. Funding working capital requirements.

2. Meeting general corporate requirements.


IPO Details:

IPO Date

08/09/2023-12/09/2023

Face Value

₹10 per share

IPO Price Band

₹200-₹211 per share

IPO Lot Size

70 Shares

Listing at

NSE, BSE

Basis of Allotment

15/09/2023

Credit of Shares in Demat

20/09/2023

Listing Date

21/09/2023

Pre-Issue Shareholding

96.71%

Post-Issue Shareholding

-

Retail Minimum Lot Size

70 shares (₹14,770)


Valuations & Margins:

Indicators

FY 21

FY 22

FY 23

EPS

61.24

62.27

23.15

P/E

-

-

8.64-9.11

EBITDA (%)

29.91

31.27

27.69

Debt/Equity

0.01

0.01

0.09

ROCE (%)

33.65

29.5

28.26


Important things to note about the Company:


Top reasons to consider the IPO:


1. EMS has an in-house designing, engineering and execution team which enables it to correctly bid with project specifications and reduces its dependence on outsourcing engineering and design work to third-party consultants.


2. The designing and engineering of projects are technically complex, time-consuming and resource-intensive because of unique project requirements. EMS constantly upgrades its technical abilities to offer its clients the full range of services at lower cost and without compromising on quality.


3. Most of the projects of EMS are World Bank-funded through local state government bodies. This helps it have robust cash flows/timely payments, and no bad debts, which helps it take more projects and increase its profit margins.


4. EMS has a Scalable and Asset Light Business model that focuses on development management or joint development agreements or joint ventures, which requires lower upfront capital expenditure compared to a direct approach.


5. Rich experience with projects, technical capabilities, timely performance, reputation for quality, as well as price competitiveness have enabled EMS Limited to successfully bid and win projects.


Risk Factors to watch out in the IPO:


1. Most agreements that EMS has entered into in connection with its business contain a penalty or liquidated damage clause for delay in the completion of a project that takes effect if the completion of a project is delayed.


2. Since it is in the infra business it requires huge working capital to run its business. The inability to acquire such cash flows can have an adverse effect on its operations.


3. The government contracts obtained by EMS Ltd contain terms that favor government clients. The scope for negotiation in these contracts are narrowed and the company may be required to accept unusual or onerous provisions in such contracts, which may affect the efficient execution and profitability of its projects.


4. The Company has availed Rs. 39.56 lakhs as unsecured loans which are repayable on demand. Any demand from the lenders for repayment of such unsecured loans may affect its cash flows.


5. For bids on specific government projects and for carrying out projects that have been awarded, the company depends on joint venture partners. Joint venture partners’ noncompliance with their obligations could impose additional financial and performance obligations on the company which could its earnings.


EMS IPO Review: Through this article, we can see that the company has shown good growth in the past and has further potential to grow provided it keeps obtaining projects from the government at desirable bids. However, as an investor it is important to do your own research before jumping in.


Crisp Insights:

  • EMS IPO GMP Today: The Company is commanding a GMP of around Rs.125.

  • EMS IPO Review: Listing gains likely as per GMP data.

  • EMS GMP is strong and hence, investors can look to invest for listing as well as long term gains.


Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.



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