Concord Enviro Systems IPO: Should you Bid?

The future of water treatment companies in India looks promising, driven by the nation’s increasing focus on environmental sustainability, urbanization and water scarcity. As India faces growing challenges related to water pollution, waste management and the efficient use of water resources, the demand for advanced water treatment solutions is set to rise significantly.

The government’s initiatives, such as the National Mission for Clean Ganga, Swachh Bharat Abhiyan and various state-level projects are creating a favorable environment for water treatment companies. These programs aim to improve water quality, enhance sanitation and provide clean drinking water to rural and urban areas.

Given this focus, here is an IPO that could be an excellent investment opportunity for those looking to invest in this sector. Concord Enviro Systems Limited is set to launch its Initial Public Offering (IPO), offering investors an opportunity to tap into the growing environmental solutions sector. The company specializes in providing sustainable water treatment and pollution control services, addressing critical environmental challenges. As concerns over environmental sustainability continue to rise, Concord Enviro Systems aims to capitalize on this demand with its innovative solutions.

In this article, we will delve into the key details of the Concord Enviro Systems IPO, analyzing its business model, growth prospects and investment potential to help you assess whether it’s a smart addition to your portfolio.

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Concord Enviro IPO Details

Concord Enviro Systems IPO is a book-built issue valued at ₹500.33 crore, comprising both a fresh issue of 0.25 crore new shares of ₹175 crore and an offer for sale (OFS) of 0.46 crore existing shares of ₹325.33 crore. This dual structure allows the company to raise capital through the issuance of fresh equity while providing an opportunity for existing shareholders to monetize their holdings.

Concord Enviro Systems’ ₹500.33 crore IPO opens for subscription on Thursday, December 19, 2024 and will close on Monday, December 23, 2024. The allotment for Concord Enviro Systems IPO is expected to be finalized on Tuesday, December 24, 2024 with a tentative listing date on the stock exchanges set for Friday, December 27, 2024. The price band for Concord Enviro shares has been fixed at ₹665 to ₹701 per share.

For detailed information, you can refer to Concord Enviro Systems IPO RHP.

Concord Enviro IPO GMP

Before its opening, the IPO has received a positive response in the unlisted market. The latest Concord Enviro IPO GMP is ₹70, indicating an expected listing gain of around 10%.

Check IPO Live GMP: View now for Real-Time Updates

Concord Enviro IPO Lot Size

Concord Enviro Systems Limited has issued 71,37,321 shares worth ₹500.33 crore for both a fresh and an offer-for-sale issue. The minimum lot size for an application is 1 lot (21 shares) and the minimum amount of investment required by retail investors is ₹14,721.

The minimum lot size investment for s-HNI (Small High Net Worth Individual) is 14 lots (294 shares), amounting to ₹2,06,094, while the maximum is 67 lots (1,407 shares), amounting to ₹9,86,307.

For b-HNI (Big High Net Worth Individual), the minimum lot size is 68 lots (1,428) amounting to ₹10,01,028.

Concord Enviro IPO Reservation Details

Below are the limits for the shares offered in the different investor categories for this IPO:

Concord Enviro IPO Anchor Investors Details

Concord Enviro raised ₹150.10 crore from anchor investors. The bid date for anchor investors in the Concord Enviro IPO was December 18, 2024.

About the Company

That concludes the details of this IPO. Now, let’s shift our focus to explore more about the company’s background, operations, strengths and risks, financial statements and key highlights.

Founded in July 1999, Concord Enviro Systems Limited is a leading global provider of water and wastewater treatment solutions, specializing in zero-liquid discharge (ZLD) technology. The company offers comprehensive in-house services across the entire value chain, including design, manufacturing, installation, operation & maintenance (O&M) and digitization like IoT. Concord Enviro is dedicated to enhancing energy efficiency and recovery, supporting industries in achieving their water conservation and sustainability objectives.

The company’s business can be segregated into the following:

1. The manufacture and sale of water and wastewater treatment systems & plants and providing turnkey solutions.

2. Operations and maintenance services.

3. The manufacture and sale of consumables and spare parts (including membranes, plants, chemicals and consumables).

4. Installation of compressed biogas plants (“CBG Plants”).

As of March 31, 2024, the company exports its solutions to North America, Latin America, Africa, the Middle East and Southeast Asia and has a large customer base of 377 customers worldwide. Additionally, the company has served over 353 domestic and 24 international customers in pharmaceuticals, chemicals, food and beverage, defence, automotive, steel and textiles with a presence in two countries. 

The company’s clients include Diageo Mexico Operaciones, S.A. De C.V., Grasim Industries Limited, AB Mauri, Anthem Biosciences Private Limited, Bhopal Glues and Chemicals Private Limited, Kasyap Sweetners Private Limited, LANXESS India Private Limited, Puja Spintex Private Limited, SFC Environmental Technologies Private Limited, SMS Limited and Tagros Chemicals India Private Limited. Furthermore, the company currently executes projects for multinational companies like Diageo Mexico Operaciones, S.A. De C.V.that include implementing a ZLD solution for their distillery in La Barca, Jalisco, Mexico and a ZLD solution for another customer at their factory in New York, United States of America.

The company has two manufacturing facilities: One in Vasai, India and another in Sharjah, UAE. Their in-house R&D team, comprising 21 employees as of March 31, 2024, develops the solutions.

Competitive Strengths:

• Diversified customer base across multiple industries and geographies.

• Market leadership in ZLD technology in India well placed to harness global industry opportunities.

• Integrated solutions provider supported by backward integrated manufacturing facilities.

• Established presence in international markets.

Industry Outlook:

• India’s per capita water availability may decline to 1,140 cubic meters by 2050, intensifying the need for robust wastewater treatment and resource management.

• India generates over 72,000 million litres of wastewater daily, highlighting the urgent need for 4,500+ sewage treatment plants (STPs) across urban and semi-urban areas.

Objectives of Concord Enviro Systems IPO

The net proceeds of the fresh Issue are proposed to be utilized in the following manner:

• Investment in the wholly owned subsidiary Concord Enviro FZE (“CEF”) to finance capital expenditure for the greenfield project in the U.A.E aimed at developing an assembly unit for water treatment systems, wastewater systems and related membrane modules.

• Capital investment in the wholly owned subsidiary Rochem Separation Systems (India) Private Limited (“RSSPL”) to expand the manufacturing facilities, storage and support activities for the Vasai Project.

• Funding capital expenditure requirements for the purchase of plant and machinery for the parent company.

• Investment in Concord Enviro FZE to prepay or repay in full or in part, certain outstanding borrowings of Concord Enviro FZE.

• Allocation of funds to Concord Enviro FZE for covering working capital needs.

• Investment in the joint venture Roserve Enviro Private Limited to enhance the pay-per-use/pay-as-you-treat business model.

• Investment in technology and other growth initiatives to access new markets.

• Allocation for general corporate purposes.

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Concord Enviro Systems Limited Financial Information (Restated Consolidated)

Concord Enviro Systems Limited’s revenue increased by 46% and profit after tax (PAT) rose by 655% in the FY 2023-24 (April 1, 2023 to March 31, 2024).

Key Performance Indicators

Concord Enviro Systems Limited has a market capitalization of ₹1450.81 crore. As of March 31, 2024, the company’s key performance indicators (KPIs) include an impressive Return on Capital Employed (ROCE) of 14.07% and a profit after tax (PAT) margin of 8.34%.

The EPS and PE ratios before and after the Concord Enviro IPO issue are detailed in the list below:

• The Pre-IPO EPS is calculated based on the pre-issue shareholding as of the RHP date and the latest FY earnings available in the RHP, as of March 31, 2024.

• The Post-IPO EPS is calculated based on the post-issue shareholding and annualized FY earnings as of August 31, 2024, as provided in the RHP.

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Concord Enviro Systems IPO Review (Apply)

The review of the Concord Enviro IPO has been conducted based on the following factors:

1. Revenue Growth: The company’s financial growth paints a robust picture. Revenue steadily climbed from ₹337.57 crore in FY22 to ₹512.27 crore in FY24, showcasing operational strength. However, in the first half of FY25 revenue experienced a slight decline.

2. Profit Growth: Profit after tax displayed significant improvement, growing from ₹16.48 crore in FY22 to ₹41.44 crore in FY24 marking a remarkable 151.45% rise. With a PAT margin of 8.34%, the company demonstrates strong profitability, which is notable for the engineering sector. It is just in FY25 that the profit experienced a slight decline.

3. Valuation Metrics: Pre-IPO P/E: 30.79 | Post-IPO P/E: 1171.52
   
   As per the offer document, the company has shown Praj Industries, Ion Exchange, Triveni Engineering, VA Tech Wabag and Thermax as their listed peers. They are trading at a P/E of 53.0, 48.2, 33.2, 40.0 and 89.1 (as of December 18, 2024). The average P/E ratio for the engineering sector is approximately 45x, making the pre-IPO valuation appear undervalued. However, the post-IPO P/E ratio seems exceptionally high due to the decline in profit in the first half of FY25.

4. Return on Capital Employed (ROCE) and Return on Net Worth (RoNW):
   
   ROCE: 14.07% reflects the company’s capital efficiency.
   
   RoNW: 12.92% is good for long-term investors.

5. GMP and IPO Price Band: With a price band of ₹665 to ₹701 and a GMP of ₹70, the market shows little interest, suggesting a potential listing gain of around 10%.

Strengths

• Market Leadership in ZLD Technology: Concord Enviro is a prominent provider of Zero-Liquid Discharge (ZLD) technology which aids industries in achieving water conservation and sustainability goals. This market leadership positions the company as a key player in addressing global environmental challenges.

• Comprehensive and Integrated Solutions: The company provides in-house solutions across the entire value chain, including design, manufacturing, installation, operations and maintenance (O&M). Its offerings include energy optimization and IoT-enabled digitalization. In essence, it has backward-integrated manufacturing facilities and a comprehensive product portfolio.

• Global Reach and Diverse Client Base: With 377 active customers across domestic and international markets, Concord Enviro serves industries such as pharmaceuticals, chemicals, food and beverages, automotive and textiles.

• Expanding Manufacturing Facilities: Concord Enviro operates manufacturing plants in Vasai, India and Sharjah, UAE, and has announced plans to develop additional facilities supporting increased production and scalability.

• Strong Financial Growth: The company has demonstrated exceptional financial performance with revenue growing by 46% and profit after tax (PAT) rising by 655% between FY 2023 and FY 2024, reflecting efficient cost management and strategic market expansion.

• Experienced Leadership: A skilled management team driving innovation and growth.

Risks

Here are some of the risk factors involved in the IPO that investors should know before subscribing to the issue. These risk factors have been highlighted by the company in its Red Herring Prospectus (RHP):

• High Dependence on R&D: Concord Enviro’s growth is dependent on successful research and development (R&D) and keeping up with the new technologies. If the company fails to develop new wastewater treatment technologies on time and in a cost-effective manner, its business and financial performance could be hampered.

• Seasonal Sales Fluctuations: The sale of systems and plants is subject to seasonal fluctuations, which can cause variability in the company’s financial results. The systems and plant sales contributed ₹98.99 crore in the five months ending August 31, 2024, ₹163.14 crore, ₹160.87 crore and ₹296.18 crore to the revenue from operations in FY22, FY23 and FY24 respectively. Any seasonal or other unexpected changes in this particular segment could adversely affect the company’s financial performance.

• Regulatory Investigations may lead to Penalties or Disruptions: There are currently 21 ongoing legal cases involving the company, its promoters, subsidiaries and certain directors. Any adverse judgments in any of these cases can be detrimental to the company’s business prospects.

• Economic Sensitivity: Slowdowns in industrial activity could impact demand for wastewater solutions.

• Regulatory Risks: Operating across multiple geographies increases compliance complexity.

• Competition: The wastewater treatment sector is competitive, with emerging players vying for market share.

All the above-mentioned risks should be considered by investors before deciding to invest in the IPO.

Opinion

Considering the company’s financial growth and modest listing gain potential, the IPO seems average. However, it can be considered for both listing gains and long-term investment. Below are the key points to help you plan accordingly:

• For Long-Term Investors: Based on the company’s performance in Q1 FY25, the issue might seem overvalued however FY24 performance suggests that the IPO is reasonably valued. Therefore, investors might consider holding their investments for the long term.

• For Short-Term Investors: Short-term traders or investors should pay attention to the GMP trend on the listing day for any short-term gains, which look average as of now with around 10% return on the listing date.

The Government of India is highly focused on environmental sustainability, urbanization and water scarcity. So, water treatment companies in India are poised for significant growth in the coming years, driven by government support, industrial demand and the pressing need for sustainable water management solutions. The sector presents vast opportunities for businesses and investors looking to capitalize on the country’s growing water treatment requirements.

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Additional Details

Promoter Holding

Mr. Prayas Goel, Mr. Prerak Goel, Ms. Namrata Goel, Ms. Nidhi Goel, Ms. Pushpa Goel and investor AF Holdings are the promoters of the company.

Concord Enviro Systems IPO Allotment Status: Check Now

Concord Enviro Systems Limited Contact Details

Address: 101, HDIL Towers, Nant Kanekar Marg, Bandra (East), Mumbai – 400051
Phone: +91-2267049000
Email: [email protected]
Website: https://www.concordenviro.in/

Concord Enviro Systems IPO Registrar Details

Registrar: Link Intime India Private Limited
Address: C 101, 247 Park, L.B.S.Marg, Vikhroli (West), Mumbai – 400083
Phone: +91-2249186270
Email: [email protected]
Website: https://linkintime.co.in/Initial_Offer/public-issues.html

Disclaimer: This article is written solely for educational purposes and should not be interpreted as investment advice or recommendations. The stock market involves significant risks, so we encourage you to seek guidance from a financial advisor before making any investment decisions.

FAQs

Q1. What is Concord Enviro IPO?
Concord Enviro IPO is a book built issue of both an offer for sale and a fresh issue, where the company aims to raise ₹500.33 crore through this IPO.

Q2. What is the price band of Concord Enviro IPO?
The price band of this IPO has been fixed at ₹665 to ₹701 per share. This price range presents a good opportunity for investors.

Q3. What are the important dates for Concord Enviro IPO?
The IPO opens on 19 December 2024 and closes on 23 December 2024. The listing of shares will take place on 27 December 2024 on both NSE and BSE.

Q4. How many shares are being offered in the Concord Enviro IPO?
A total of 71,37,321 shares are being offered in the company’s IPO.

Q5. What is the lot size of Concord Enviro Systems IPO?
The lot size of the Concord Enviro IPO is 21 shares.

Q6. How can I apply for Concord Enviro Systems IPO?
You can apply for the Concord Enviro Systems IPO online. The application can be made via UPI and the deadline for submission is 23 December 2024.

Q7. What is the GMP of Concord Enviro IPO?
The GMP of Concord Enviro IPO has reached ₹70, indicating an expected listing gain of around 10%.

Q8. Who are the lead managers of Concord Enviro Systems IPO?
The lead managers of this IPO are Motilal Oswal Investment Advisors Limited and Equirus Capital Private Limited.

Q9. What is the business model of Concord Enviro Systems?
Concord Enviro is a leading global provider of water and wastewater treatment solutions, specializing in zero-liquid discharge (ZLD) technology.

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