Concord Enviro Systems IPO Day 3: Should you apply or not? Check GMP, subscription status, review and more

Concord Enviro Systems IPO: The initial public offering (IPO) of Concord Enviro Systems continued to witness a healthy response from investors on the final day of bidding. The IPO, which opened for subscription on December 19, is set to close today, December 23.

As of 1:15 p.m., the issue was oversubscribed by 2.33 times, with strong interest from retail investors, whose portion was subscribed 3.32 times. The NII segment was also oversubscribed 2.95 times, while the QIB segment saw limited interest, with a subscription rate of only 0.02 times, according to exchange data.

The IPO is a book-built issue worth ₹500.33 crore, comprising a fresh issue of 0.25 crore shares aggregating to ₹175 crore and an offer for sale of 0.46 crore shares aggregating to ₹325.33 crore. The IPO price was set between ₹665 and ₹701 per share.

The minimum lot size for retail investors has been set at one lot, consisting of 21 shares, requiring an investment of ₹14,721. The allotment for the Concord Enviro Systems IPO is expected to be finalised on Tuesday, December 24, 2024.

The IPO is scheduled to list on both the BSE and NSE platforms, with the tentative listing date set for Friday, December 27, 2024. 

Motilal Oswal Investment Advisors and Equirus Capital Private are the book-running lead managers for the Concord Enviro IPO, while Link Intime India Private Ltd serves as the registrar for the issue.

The company plans to utilise the net proceeds from the issue for several strategic purposes. These include investments in its wholly-owned subsidiaries, such as Concord Enviro FZE and Rochem Separation Systems (India) Private, as well as funding capital expenditure requirements for purchasing plant and machinery.

Additionally, the company intends to invest in its joint venture, Reserve Enviro Private, to expand its pay-per-use/pay-as-you-treat business model. Further, the proceeds will support investments in technology and other growth initiatives to access new markets, along with meeting general corporate purposes.

GMP signals muted listing

As of today, the GMP for Concord Enviro Systems’ IPO is ₹40 per share, indicating that the shares are expected to list ₹40 above their issue price. Based on this GMP and the IPO price, the estimated listing price of the shares is ₹741, representing a 5.70% premium over the issue price of ₹701 per share.

The grey market premium is the difference between an IPO’s issue price and its expected listing price in the unofficial market, reflecting investor sentiment and demand before the stock officially begins trading.

It is important to note that GMP is only a preliminary indicator of the listing price and should not be used as the sole basis for investment decisions.

About Company

The company is a global water and wastewater treatment and reuse solutions provider, including zero-liquid discharge (ZLD) technology. It offers in-house solutions across the entire value chain, including design, manufacturing, installation, operation and maintenance (O&M), and digitalisation, such as IoT.

As of Fiscal 2024, the company was among the top six largest companies in Indian industrial water recycling and reuse systems in terms of revenue, with a market share of 14.50%.

Concord operates with two manufacturing plants, one each in Vasai (India) and Sharjah (UAE), catering to customers across the globe. As of 31st August 2024, the company’s order book stood at ₹5,017 million, of which 74.5% comprises system and plant orders and 25.5% comprises O&M services, as per the RHP report. 

Should you apply for the IPO?

Domestic brokerage firm Indsec Securities has given a “Subscribe” rating to the issue, citing that the IPO valuation is in line with its peers. “At the upper price band of ₹701, Concord Enviro is valued at an EV/EBITDA of 22.3x on an FY24 basis, which is in line with the average valuation of 23.7x for its peers,” said the brokerage.

The brokerage stated that the wastewater recycling market is globally poised for significant growth, driven by industrial demand and stringent regulations. Industry growth tailwinds and reasonable valuation present opportunities to capture the upside.

Similarly, Canara Bank Securities has also assigned a “Subscribe” rating to the issue, stating that the IPO valuation is available at a P/E of 30.79x for FY24, which is better than its peers.

“The company operates in the high-potential water recycling and treatment industry, addressing critical environmental challenges with innovative technologies. With only 0.01% of industrial water being recycled and significant regional disparities in water costs, the sector offers immense growth opportunities,” said the brokerage.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.