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  • Writer's pictureJatin Agarwal

Urban Enviro Waste Management IPO


Company and IPO Overview:


Urban Enviro Waste Management is involved in the Indian MSW (Municipal Solid Waste) management industry, providing a variety of MSW services such as solid waste collection, transportation, waste segregation, processing, and disposal services across cities in Western India, primarily catering to Indian local municipalities.


Its "Solid Waste" business is run and controlled regionally, focusing on specific geographic areas and offering collection, transfer, and disposal services. It also conducts business in providing manpower such as staff, labourers, and skilled/unskilled labour to various businesses and organizations.


Having undertaken more than 27 projects as of January 31, 2023, of which 22 are ongoing and 5 are completed it has demonstrated its track-record as a comprehensive service provider equipped with the resources to handle large-scale projects for municipalities as well as private players.


It primarily undertakes: (i) MSW projects, which involve collecting MSW from households, slums, commercial establishments, and other bulk-waste generators (community bins) from a designated area via primary collection vehicles and transporting it to a processing facility, transfer station, or disposal site; (ii) MSW processing projects, which involve sorting and segregating the waste received from MSW, followed by composting as needed; and (iii) Street sweeping projects which involve deploying of sweeping brooms, manpower, comprehensive maintenance, consumables, safe disposal of the waste and any other items required for completion of the cleaning operation of the designated areas.


Urban Enviro Waste Management is an NSE SME IPO and the company is about to raise around ₹ 11.42 crores via IPO. The price of the IPO is fixed at ₹ 100 with a market lot of 1200 shares. The retail quota is 50% and NII is 50%.


Financials (rounded off):

Date

Total Revenue (₹ in cr)

​​​PAT (₹ in cr)

​31/03/2020

12.8

0.75

31/03/2021

15.87

0.83

31/03/2022

19.77

1.29

31/12/2022

26.47

1.06


Objectives of the Issue:


1. The proceeds of the fresh issue component will be utilized to repay secured borrowings, including foreclosure charges and accrued interest.

2. It will also use the fund partially for working capital purposes.


IPO Details:

IPO Date

12/06/2023-14/06/2023

Face Value

₹10 per share

IPO Price Band

₹100 per share

IPO Lot Size

1200 Shares

Listing at

NSE SME

Basis of Allotment

19/06/2023

Credit of Shares in Demat

21/06/2023

Listing Date

22/06/2023

Pre-Issue Shareholding

-

Post-Issue Shareholding

-

Retail Minimum Lot Size

1200 shares (₹1,20,000)


Valuations & Margins:

Indicators

FY 20

FY 21

FY 22

EPS

2.2

2.43

3.79

P/E

-

-

26.39

EBITDA (%)

12.86

11.45

17.34

Debt/Equity

0.92

0.99

3.84


Important things to note:


1. Revenue growth has been consistent, and this is a business that relies heavily on prompt and faultless performance.

2. The company has a high debt to equity ratio of approximately 4X, which would be boosted by loan repayments from the IPO cash. This would improve the company's solvency ratios.

3. The pricing is the IPO's biggest risk. The stock is now priced at 26.4 times FY22 earnings, which is unlikely to alter significantly given the modest growth expected in FY23 based on the 9-month data available.

4. Because the valuation is approximately three times that of the peer group, investors may not have much on the table.

5. Business has to handle unorganized labour and that remains a challenge in the business.

6. The profit margins in the latest fiscal year FY22 have been about 6.5%, largely being a project driven business.


Crisp Insights:

  • Current Grey Market Premium is NIL.



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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