EMS offers niche water infra bet amid government push
construction company EMS plans to raise ₹146 crore through a fresh issue of shares and up to ₹175 crore through an offer for sale. The company plans to use ₹101.2 crore to fund working capital requirements.
Investors may consider investing in the initial public offering (IPO) given the asset-light business model, strong revenue visibility and reasonable valuations.
Business: The company designs and constructs projects related to water treatment, water supply, water plant, distribution, operation and maintenance of wastewater for government bodies. It has an order book of close to ₹1,800 crore.
This provides revenue visibility for at least three years.
Being a focused and niche player in the water segment, the company is likely to gain from the various schemes launched by the government such as Jal Jeevan Mission-'Har Ghar Jal', Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and Jawaharlal Nehru National Urban Renewal Mission. These schemes focus on creating water infrastructure in urban and rural areas.
The company not only bids and executes projects on its own but also jointly bids and executes with other infrastructure companies.
The company has successfully completed 67 projects as of July 31, 2023, across states of Bihar, Uttarakhand, Madhya Pradesh, Rajasthan, Haryana.
Financials: Given EMS' asset-light business model, it has no debt.
In the three fiscal years ended FY23, the company's total revenue grew to ₹543.2 crore from ₹336.1 crore while net profit jumped to ₹108.6 crore in FY23 from ₹71.9 crore in FY21.
Valuation: Considering EMS' FY23 financials, the issue commands a P-E multiple of 10.9. Peers in the segment trade at P-E of between four and 18.
Raises Rs 96 cr from anchors
EMS on Thursday
