Antony Waste Handling Cell lists at 36% premium over issue price

In its second attempt to raise funds from the market, Antony Waste increased the IPO size to Rs 300 crore from Rs 200 crore
Shares of Antony Waste Handling Cell made a decent debut at the bourses on Friday with stock of the solid waste management services company listing at Rs 430, a 36.5 per cent premium against its issue price of Rs 315 per share on the BSE. By 10:07 AM, the stock had hit an intra-day high of Rs 492.75, up 56.4 per cent from the issue price.

At close, the stock erased gains and settled 5 per cent lower than the listing price, at Rs 408 per share. It was, however, still up around 30 per cent compared to the issue price.

In its second attempt to raise funds from the market, Antony Waste increased the IPO size to Rs 300 crore from Rs 200 crore earlier and received bids for 10,02,71,821 shares against its offer size of 66,66,342 shares. The retail individual investors (RIIs) quota was subscribed 16.55 times, qualified institutional buyers (QIBs) 9.67 times and non-institutional investors 18.69 times. Earlier in March 2020, the IPO had failed to sail through following poor response from investors and weak market conditions on account of Covid-19 pandemic.

With increasing energy demand and government initiatives, the waste to energy (WTE) market is anticipated to see more public-private partnership based projects, analysts say. The industry is expected to grow at an 8.9 per cent compounded annual growth rate (CAGR) over FY20-25 to reach 115 million tonnes per annum by FY25. Moreover, the domestic MSW management services market, which was at Rs 5,000 crore in FY20, is expected to grow at a 14.4 per cent CAGR to reach at Rs 9,800 crore by FY25. 

Therefore, Antony Waste Handling, which is the second largest player in the domestic MSW management sector with a market share of around 9 per cent per cent as of FY20, stands to gain the most, analysts say.

Financial performance of the company took a hit amid the Covid-19 pandemic. Consolidated top-line declined by 5.1 per cent on a yearly basis in H1FY21. EBITDA and PAT margins, meanwhile, contracted by 538bps and 324bps, respectively to stand at 25 per cent and 9.5 per cent. Analysts now forecast a top-line growth of 9 per cent CAGR over FY20-23 with a 343-bps and 5 bps contraction in the EBITDA and PAT margins, respectively.

For Keshav Lohati, associate equity analyst at Angel Broking, concerns that if the company is not able to win an existing major contract again, given that the top 5 clients contributed 81.8 per cent of the revenue of the fiscal year 2020, it may 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," he said in IPO note.

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