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Concord Enviro Systems Ltd specializes in the manufacturing and sale of water and wastewater treatment systems, including Zero Liquid Discharge (ZLD) solutions. The company also provides turnkey project execution and operation and maintenance services for these plants. It operates manufacturing facilities in Vasai, Maharashtra, and Sharjah, UAE. As of August 31, 2024, the company has over 289 domestic and 21 international customers across various industries such as pharmaceuticals, chemicals, food and beverages, defense and energy, automotive and auto components, steel, and textiles. Its clientele includes prominent names like Diageo, Grasim Industries Limited, AB Mauri, Anthem Biosciences, and LANXESS India, among others. The company’s order book stood at Rs.5,018 million, with 74.5% comprising system and plant orders and 25.5% from after-sales services.

Investment Rationale:

Expertise in ZLD technology in India:

As of FY24, the company ranks among the top two ZLD solution providers in India by revenue and is also a prominent Indian manufacturer of offshore desalination systems. It specializes in developing proprietary technologies, including Ultra High-Pressure Reverse Osmosis (UHPRO) systems and advanced Waste Heat Evaporation (WHE) systems, which achieve a ~97% reduction in energy demand for ZLD compared to conventional water purification methods. The company's R&D efforts are centered on creating innovative membranes and designing highpressure modules for membrane systems, with a focus on optimizing production costs by minimizing pre-treatment requirements and enhancing module and membrane design. Additionally, the company plans to expand its production capacity in Sharjah, where it will manufacture membrane modules, WHE modules, and containerized plants.

Integrated solutions providersupported by backward integrated manufacturing facilities:

The Company designs and manufactures its own ZLD systems, leveraging in-house R&D to develop membranes-accounting for 80% of the raw materials-and highpressure modules capable of operating at pressures up to 220 bar, as well as waste heat evaporators. In addition to its core products, the company offers operation and maintenance (O&M) services supported by a proprietary Internet of Things (IoT)-enabled data capture and analysis platform. This platform facilitates real-time monitoring and system troubleshooting, ensuring efficient and reliable operation of its solutions.

Expand into new sectors for wastewater reuse and zero liquid discharge:

The Company aims to expand its service portfolio by targeting high water-consuming sectors such as paper mills, refineries, common effluent treatment plants (CETPs), power plants, solar panel manufacturing, and sewage treatment plants. It has already executed successful projects, including a paper mill in northern India, a CETP in southern India, and is currently working on a water block package for a refinery in Mongolia. Additionally, the company plansto focus on industriesin coastal regions facing watershortages, such as Dahej and Vizag, by offering ZLD solutions as a sustainable alternative to coastal wastewater discharge. Its R&D team is developing low-pressure, low-rejection membranes designed for lean wastewater applications. These innovations aim to provide efficient solutions for various industries, including pharmaceuticals, chemicals, distilleries, steel, energy, automotive and ancillaries, as well as food and beverages.

Valuation and View:

Concord Enviro Systems is well-positioned to benefit from increasing ZLD adoption, expanding order book, and strong technological differentiation. Backward integration, after-sales services, and international growth offer sustainable margin improvement. Investors with a medium to long-term perspective can consider this as an attractive growth opportunity.

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