EMS IPO: The initial public offering of water and sewerage infra player EMS Ltd has been opened for public subscription on September 8 and will be closed on September 12 this year. The company raised Rs 96.37 crore from anchor investors on Thursday, September 7. The price band for the Rs 321-crore IPO has been fixed at Rs 200-Rs 211 per share.
The allotment of shares will take place on September 15.
EMS IPO: Latest GMP Today
According to market observers, unlisted shares of EMS Ltd are currently trading Rs 120 higher in the grey market. The Rs 120 grey market premium or GMP is about 56.87 per cent higher than its upper issue price of Rs 211 per share. This means the grey market is expecting 56.87 per cent listing gain from the public issue.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
About EMS IPO
The water and sewerage infra player has decided to allocate 45.67 lakh equity shares to six entities at Rs 211 apiece, which is also the upper end of the price band.
Abakkus Diversified Alpha Fund, Saint Capital Fund, Meru Investment Fund, Bofa Securities Europe, Morgan Stanley Asia Singapore Pte and NAV Capital VCC- NAV Capital Emerging Star Fund are among the anchor investors.
The IPO comprises fresh issue of equity shares worth Rs 146.24 crore and an Offer For Sale (OFS) of 82.94 lakh shares by promoter and founder Ramveer Singh. Currently, Singh holds 97.81 per cent stake in the company.
In the pre-IPO placement round, the firm had raised Rs 33.76 crore leading to a reduction in fresh issue size to Rs 146.24 crore from Rs 180 crore planned earlier.
At the upper price band, the company’s IPO size is Rs 321 crore.
The proceeds from the fresh issue will be used to fund working capital requirements and for other general corporate purposes.
Khambatta Securities is the sole book-running lead manager to the issue and shares of the company will be listed on the BSE and the NSE.
The company offers water and sewerage infra solutions, including laying the sewerage network to build sewerage and water treatment plants in Uttar Pradesh, Bihar, Uttarakhand and Rajasthan.
EMS IPO: Should You Subscribe?
Brokerage firm Anand Rathi said the issue is reasonably priced. It has given ‘Subscribe’ rating to the IPO. “At the upper price band company is valuing at P/E (price-earnings) of 10.7 times FY23 earnings with a market cap of Rs 11,717 million post issue of equity shares and return on net worth of 22.31 per cent,” the brokerage said.
Another brokerage Stoxbox also assigned a ‘Subscribe’ rating to the issue. It said, “EMS has successfully completed 67 projects as on July 31, 2023, and gradually intends to expand its business operations to other regions of the country, especially North-East and South India. Almost all of the company’s projects are World Bank-funded through local state government bodies. This is the main reason for their robust cash flows/timely payments, and no bad debts, which helps them to take on more projects with the help of internal accruals only. As a result, there is savings in the finance cost which helps to improve the profit margin.”
On the upper price band, the issue is valued at a P/E of 9.1 times based on FY2023 earnings, which we feel is fairly valued compared to its peers, it said.