Updated: September 4, 2023
EMS Limited (previously known as EMS Infracon) is preparing for its IPO, which is scheduled to open for public offerings on September 8, 2023. As a major player in the water and wastewater management sector, EMS Limited’s IPO has attracted a great deal of attention from investors. This article provides a detailed overview of the EMS IPO, including important dates, pluses and minuses, and a comprehensive review of whether to subscribe.
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EMS IPO Details
| IPO start date | September 8, 23 |
| IPO deadline | September 12, 2023 |
| IPO Listing Date | 21-9-23 |
| Kind of problem | Book Built Issue IPO |
| face value | 10 rupees per share |
| IPO price range | Rs.200 to Rs.211 per share |
| lot size | 70 shares |
| Minimum order quantity | 70 shares |
| exhibition place | BSE and NSE |
| total issue size | Rs.32.124 billion |
| Latest issue | Rs.14.624 billion |
| OFS | Rs.175 million |
Financial Status of EMS Limited (Revised Consolidation)
| Fiscal year end/end (amounts in billions) | ||||
| detail | 2020 | 21st year | 22nd year | 23rd year |
|---|---|---|---|---|
| assets | 308.08 | 378.31 | 502.55 | 641.41 |
| Earnings | 332.36 | 336.18 | 363.10 | 543.28 |
| Profit after tax | 72.43 | 71.91 | 78.93 | 108.85 |
| net worth | 229.99 | 301.91 | 380.18 | 487.83 |
| reserves and surplus | 218.24 | 290.16 | 368.43 | 443.45 |
| Borrowing amount | 14.80 | 3.16 | 3.71 | 45.40 |
IPO Eligible for EMS IPO
IPO offerings include both Offer for Sale (OFS) and new offerings.
- Under OFS, that amount is paid to selling shareholders.
- New questions are used for:
- financing the company’s working capital requirements; and
- General corporate purposes.
EMS IPO Price Evaluation
To assess the valuation of EMS Limited IPO, let’s consider key financial metrics.
- EMS IPO price range from Rs 200 to Rs 211 per share
- Considering last year’s 2023 EPS was Rs 23.15, the P/E ratio is 9x.
- Considering the weighted EPS of Rs 42.54 over the last 3 years, the PER is 5x.
- Only publicly traded peers like VA Tech Wabag trade at 14x earnings. It may not be fair to compare only one company, but the 9x to 5x P/E IPO price range is attractive.
EMS IPO GMP Today
GMP for EMS Limited IPO is between Rs 100 and Rs 120 as indicated on various websites, but all this is not through authentic sources.
EMS IPO – What are the reasons for investing in this IPO?
- Diverse Portfolio: EMS Limited is engaged in the business of providing a wide range of water and wastewater management services including sewerage solutions, water supply systems, water and wastewater treatment plants, power transmission and distribution. This diversified portfolio enhances the company’s potential to serve a wide variety of government authorities and entities.
- strong track record: EMS Limited has a history of successfully operating and maintaining multiple projects including WWSP, WSSP, STP, etc. across 5 states. This proves the company’s experience and competence in this field.
- experienced team: The company has its own civil engineering and construction team, employs over 57 engineers, and is supported by third-party consultants and industry experts. This experienced workforce contributes to the efficient execution of your project.
- Appropriate PER: With a P/E of 9x, EMS Limited’s IPO looks reasonably priced compared to its market capitalization. This valuation could be attractive to potential investors.
EMS IPO Risk Factors
- legal proceedings: The Company, its promoters/directors and group companies are currently involved in certain legal proceedings. An adverse outcome in any of these legal matters could have a material impact on the Company’s business, financial condition and results of operations.
- Past blacklist registration: The company has a history of being blacklisted in the past, which could raise concerns about its reputation and ability to secure future projects.
- Penal clause: Most contracts related to the company’s business contain penalty and damages clauses for late completion of projects. There is financial risk if the project is not completed on time.
- reliance on government contracts: EMS Limited derives its revenue primarily from contracts entered into by governmental authorities/entities and is often funded by the World Bank through national and state governments. Any cuts in budget allocations to this area could impact the number of projects available for bid and affect the company’s business.
- technology adaptation: The company relies on traditional technology in the design and installation of wastewater treatment and water supply projects. Inability to adapt to new technologies or changing government requirements can affect a company’s ability to bid on such projects.
- competitive bidding: We compete for projects through a competitive bidding process conducted by government authorities. Failure to qualify, compete or win future projects could adversely affect the Company’s business and financial performance.
- capital intensive industry: The industry in which EMS Limited operates is capital intensive and requires a relatively long lead time for project execution. The company requires significant cash to operate its business and failure to secure additional funding on favorable terms could impact growth and profitability.
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EMS IPO Review – Should You Invest or Avoid?
EMS Limited’s IPO presents a promising opportunity for the water and wastewater sector. A diversified portfolio and strong track record have made the EMS IPO stock price attractive.
Investors should consider full risk factors, including the company’s past blacklistings, reliance on government contracts, and more.
High-risk investors can invest in such IPOs with a medium- to long-term perspective.
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Suresh KP is the founder of Myinvestmentideas. He is his NISM Certified – Investment Advisor and he is a NISM Certified – Research Analyst. I have been analyzing financial markets for the past 20 years. You can contact me at suresh@myinvestmentideas.com.
