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Leading Player in Municipal Solid Waste.

Incorporated in 2001, Antony Waste Handling Cell Limited (AWHCL) is engaged in offering Municipal Solid Waste (MSW) management services. Company are one of the top five players in the Indian MSW management industry with an established track record of more than 19 years, providing full spectrum of MSW services which includes solid waste collection, transportation, processing and disposal services across the country, primarily catering to Indian municipalities. Company is among the select few players who have pioneered in both MSW collection and transportation sector. It has in-house expertise in landfill construction and management sector.

Positives:

(a) Presence in the fast-growing MSW management industry with end-toend capabilities

(b) Strong track record of project execution

(c) Long term contracts with municipalities

(d) Experienced promoters and management team with strong domain expertise.

Investment concerns:

(a) Business is dependent on municipal authorities for a substantial proportion of the revenue

(b) This business involves receivables risk from municipalities, which can lead to financial instability for the company. This also restricts further investment in asset development

(c) Business dependent on a limited number of customers for a significant portion of the revenue.

Outlook & Valuation:

For Antony to grow its business it needs to win new contracts from municipalities. The top 5 clients contributed 81.8% of the revenue of the Fiscal year 2020. So in the future if a company is not able to win an existing major contract again, it will impact the financials adversely. Further, the business involves receivables risk from municipalities, which restricts the future growth opportunities. Financial conditions may be adversely affected if new municipal solid waste projects are not awarded to the company. So considering the valuation of P/E of 11.5x on FY20 basis (at the upper price band), we recommend “NEUTRAL” rating on the issue.

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