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Salient features of the IPO:

• EMS Ltd. (EMS), a sewerage solution provider is coming up with an IPO to raise around Rs. 320cr, which opens on 8th Sept. and closes on 12th Sept. 2023. The price band is Rs. 200 - 211 per share.

• On 18th Jul. 2023, the company in consultation with the BRLM had undertaken a pre-IPO placement of 0.16cr equity shares at an issue price of Rs. 211 per equity share. Total amount raised was Rs. 33.8cr. Consequently, the fresh issue size is reduced by a similar amount (a fresh issue of Rs. 180cr was proposed during the filing of the DRHP).

• The IPO is a combination of fresh issue (Rs. 146.2cr) and OFS (Rs. 165.9 - 175cr). The company will not receive any proceeds from the OFS portion. From the fresh issue net proceeds, EMS will be utilizing Rs. 101.2cr for funding the working capital requirement. Residual funds will be used for general corporate purposes.

• One of the promoter & promoter group (P&PG) entities is participating in the OFS and offloading 0.829cr shares. Post-issue, P&PG will have 69.7% stake, compared to 96.71% pre-IPO. Consequently, public shareholding will increase from 3.29% to 30.3%.

Key competitive strengths:

• In-house designing, engineering and execution team

• Strong execution capabilities with industry experience

• Use of traditional technologies in the construction and installation of WWSP or WSSP

• World Bank funded projects

• Robust order book

• Scalable and asset-light business model supported by strong financial position

• Experienced promoters and senior management team

Risk and concerns:

• Unfavorable government policies & regulations

• Difficulty in adopting new technological advancement

• Delay in executing the HAM project

• Working capital intensive operations

• Difficulty in maintaining the profitability

• Competition

Below are the key highlights of the company:

• Indian metropolitan cities are witnessing major expansion as a result of economic reforms and growth. This expansion in urban population is unsustainable without efficient planning of cities and provision of utility services especially clean & affordable water. Fresh water is consumed by the populations and waste water is mainly disposed back into the river, thereby contaminating the water source/bodies. This has raised serious challenges for urban wastewater management, planning and treatment.

• To address these challenges, the Indian government has introduced ambitious initiatives like the Jal Jeevan Mission (JJM), AMRUT, NAMAMI Gange Programme, SWAJAL etc. Through JJM, the government is targeting to provide safe & adequate drinking water through individual household taps to all rural households by 2024. One of the key objectives of JJM is to assist in ensuring sustainability of water supply system i.e. water source, water supply infrastructure and funds for regular operation & maintenance. The total outlay for JJM is Rs. 3.6lakh cr. Additionally, with an outlay of around Rs. 3lakh cr, the government through its AMRUT 2.0 scheme is targeting to improve the quality-of-life of all urban dwellers by making Indian cities water secure.

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