EMS sees healthy listing despite market weakness. Should you hold the stock for long term?
EMS shares debuted with a strong premium of over 30% on Thursday. The stock is trading at Rs 280.7 apiece, up 33% over the issue price of Rs 211.
The listing was in-line with expectations, mainly driven by strong fundamentals and good subscription figures.
Analysts said investors may hold the stock for the long term as the company has robust cash flows with no bad debts.
Most of the company’s projects are World Bank-funded.
«The strong performance helps them to take on more projects with the help of internal accruals only. As a result, we remain positive on the company and advise investors who are allotted the shares to hold them from a medium-to-long-term perspective,» said Shreyansh Shah, Research Analyst, StoxBox.
Proceeds from the fresh issue will be used to fund working capital requirements and other general corporate purposes.
«This IPO will give us a boost in meeting the company's working capital needs and improve its eligibility for high-value projects,» said the company's promoter and founder Ramveer Singh.
EMS offers water and sewage infra solutions, including laying the network to build sewage and water treatment plants in the northern states of UP, Bihar, Uttarakhand and Rajasthan.
The company has executed 67 projects over the past 13 years and has an order book of Rs 1,775 crore, which includes 18 ongoing projects.
«The company has a strong order book and is well-positioned to benefit from the government's focus on infrastructure development.
