About Company’s Business:
The company operates as a provider of sewerage solutions, water supply systems, water and waste treatment plants, electrical transmission and distribution, road construction, and allied infrastructure services. They are also involved in the operation and maintenance of Wastewater Scheme Projects (WWSPs) and Water Supply Scheme Projects (WSSPs) for government authorities and bodies.
WWSPs encompass Sewage Treatment Plants (STPs), Sewage Network Schemes, and Common Effluent Treatment Plants (CETPs), while WSSPs include Water Treatment Plants (WTPs), pumping stations, and the laying of water supply pipelines. These projects adhere to the Ministry of Environment, Forest and Climate Change of India’s norms, and the treated water is suitable for purposes like horticulture, washing, refrigeration, and industrial processes.
The company actively participates in tenders issued by entities such as CPWD (Central Public Work Department), State Governments, and Urban Local Bodies (ULBs) to develop WWSPs and WSSPs, either on an EPC or HAM (Hybrid Annuity Model) basis. All of the company’s revenue is derived from government tenders and projects. Detailed information on their Order Book can be found in the “Order Book” section on page 225 and the “Risk Factors” chapter starting on page 32 of the Red Herring Prospectus.
They maintain an in-house team for design, engineering, and construction, which ensures self-sufficiency in their operations. This team comprises 61 engineers supported by external consultants and industry experts to ensure compliance with industry and government standards. The company also manages civil construction work in-house, reducing reliance on third-party contractors. Their services typically encompass project design and engineering, raw material procurement, on-site execution, overall project management, and commissioning. They also handle post-commissioning operations and maintenance, often a part of recent project awards. Currently, they operate 18 projects and 5 operations and maintenance projects across more than five states as of July 31, 2023.
Services offered by the company include sewerage and related works, including the design, procurement, laying, jointing, testing, commissioning, operation, and maintenance of new and existing sewerage networks. They also provide services for designing, constructing, operating, and maintaining Sewage Treatment Plants and Sewage Pumping Stations, as well as water supply works, which encompass the design, procurement, laying, jointing, testing, commissioning, operation, and maintenance of new water supply and distribution networks, reservoir construction, and refurbishment of existing water supply infrastructure. Additionally, they undertake road and allied works, including the construction of new road networks and the repair/renovation of existing ones. Other services offered involve the design and construction of power transmission and distribution infrastructure, buildings, and other related construction projects. They also engage in designing, installing electricity transmission systems and various construction-related activities.
About the Industry:
In the context of the water and wastewater industry in India, it is important to note that India ranks as the world’s second most populous nation, with a staggering 1.38 billion people. Among this vast population, approximately 65% reside in rural areas, while the remaining 35% are connected to urban centers, as reported by the United Nations in 2019. The rapid expansion of metropolitan cities in the country is a direct consequence of economic growth and reforms. However, this urban population surge cannot be sustained without careful city planning and the provision of essential utility services, particularly clean and affordable water. Typically, water allocation in cities is drawn from a shared resource pool, serving multiple sectoral demands.
Looking ahead to the year 2050, it is projected that India will require approximately 1450 cubic kilometers (km3) of water. Of this, roughly 75% will be designated for agricultural use, approximately 7% for drinking water, roughly 4% for industrial purposes, and approximately 9% for energy generation. Nevertheless, due to the escalating urbanization trend, the demand for drinking water is expected to take precedence over rural water requirements. Many Indian cities are strategically located along riverbanks, where freshwater is extracted for consumption by the populace, and wastewater is discharged back into these rivers. This practice has led to contamination of water sources, affecting both drinking water quality and irrigation. Consequently, urban wastewater management, planning, and treatment have become pressing challenges.
According to data from the Central Pollution Control Board (CPCB), rural regions generated an estimated 39,600 million liters per day (MLD) of wastewater, while urban regions accounted for approximately 72,368 MLD in the year 2020-21. This marked disparity in wastewater volume between urban and rural areas can be attributed to the greater availability of water for sanitation in cities, which has resulted in an improved standard of living.
Shifting the focus to the construction sector, it holds significant importance as an indicator of a nation’s development. Broadly, the construction industry can be categorized into infrastructure, real estate, and industrial construction. Infrastructure, in particular, encompasses various sectors such as roads, highways, telecommunications, airports, ports, power, oil and gas, and railways. In the fiscal year 2022, the construction sector contributed around 8% to the national Gross Value Added (GVA) at constant prices.
The increasing demand for infrastructure and various government initiatives indicate the potential for India to emerge as the world’s third-largest construction market, presenting substantial growth prospects.
Key Financial Information (â‚ą in lakhs):
| Particulars | 2023 | 2022 | 2021 |
|---|---|---|---|
| Share Capital | 4,700.00 | 1,175.00 | 1,175.00 |
| Reserve & Surplus | 44,083.23 | 36,842.99 | 29,016.46 |
| Net Worth (Equity attributable to owners) | 48,783.23 | 38,017.99 | 30,191.46 |
| Total Income (including other income) | 54,327.71 | 36,309.84 | 33,618.42 |
| Total Comprehensive Income/Profit | 10,881.63 | 7,904.62 | 7,195.37 |
| Basic Earnings per Share (in Rs.) | 23.15 | 67.27 | 61.24 |
| Diluted Earnings per Share (in Rs.) | 23.15 | 67.27 | 61.24 |
| Net Asset Value per Share (in Rs.) | 103.79 | 323.56 | 256.95 |
| Total Borrowings | 4,539.56 | 371.31 | 316.29 |
Objective of the Issue:
a. Funding the working capital requirements of the company.
b. General corporate purposes.
For more detailed information, you can refer to the IPO Prospectus (RHP) filed by the company.
| Important information regarding the IPO | |
|---|---|
| Open Date | Friday, September 8, 2023 |
| Close Date | Tuesday, September 12, 2023 |
| Issue Size | â‚ą321.24 crores |
| Price | â‚ą200 to â‚ą211 per share |
| Lot Size | 70 Shares |
| Basis of Allotment | Friday, September 15, 2023 |
| Initiation of Refunds | Monday, September 18, 2023 |
| Credit of Shares to Demat | Wednesday, September 20, 2023 |
| Listing Date | Thursday, September 21, 2023 |
How to apply for this IPO?
You can locate the redirection link to the IPO on the home screen of the Dhan App. Alternatively, you can access it by navigating to the “Money” Section at the bottom right and swiping right to reach the “IPO” Tab.
Do let us know your thoughts on this IPO.