Effwa Infra & Research Limited (EIRL) is engaged in the business of engineering, consultancy, procurement, construction and integrated project management services in water pollution control, encompassing sewage and industrial effluent treatment, solid waste treatment and disposal, ventilation systems, hazardous waste management, and water treatment plants. Additionally, they also function as consultants and advisors, providing a range of services encompassing project organization, management, equipment procurement, funding, and project execution. The Company works on the concept revolving around 4R i.e., Reducing, Recycling, Reusing and Rehabilitation to provide technological solutions for a range of industries, thus, enabling them to achieve Zero Liquid Discharge through recovery and recycling of water from effluent streams. They cater to the following industries such as textile, leather, paper, food processing, dairy, chemicals, dyes and intermediates, steel, mining, power, pharmaceutical and bulk drugs, sugar, distilleries, fertilizers, pesticides, ceramics, petrochemicals, and many others. Furthermore, the emphasis on achieving ZLD demonstrates a commitment to minimizing environmental impact and maximizing resource efficiency, which can be attractive to environmentally conscious businesses and regulatory bodies Company acquires projects through transparent competitive bidding process undertaken by the state government institution, central governments institution, public sector undertakings and other private institution. They participate in tenders for projects for Effluent Treatment Plant, Sewage Treatment Plant and Reclamation, Industrial Wastewater Treatment and Distribution, with ZLD (Zero Liquid Discharge) System. The company operates in the Domestic Market as well as International Market, across Eight States including a Special Economic Zone. These regions include Andhra Pradesh, Chhattisgarh, Gujarat, Maharashtra, Odisha, West Bengal, Madhya Pradesh, Rajasthan, and the Special Economic Zone includes Adani Port based on sales made for the financial year ended March 31, 2024, 2023 and 2022. The company has successfully completed over 45 water management infrastructure projects as on March 31, 2024, catering to a diverse clientele including public sector undertakings (PSUs), municipal corporations, state governments, and private enterprises. Over the years, they have cultivated a specialized team comprising 12 engineers dedicated to the design, engineering, and construction of Wastewater Treatment & Recycling Systems, focusing on Zero Liquid Discharge system with conveyance systems for secondary treated sewage water and fresh water. In addition to the design team, they have a workforce of 76 engineers spanning Civil, Mechanical, and Electrical Instrumentation & Automation, Piping, Safety & Quality Control Disciplines, tasked with the seamless execution of projects. They collaborate with third-party consultants and industry experts as needed, ensuring that the projects meet regulatory requirements. At present, company is managing several ongoing projects. The Order Book, as of May 31, 2024, stands at Rs 52,624.62 Lakhs. Within this book, 65% of the total value is attributed to Public Sector Undertakings (PSUs), while 35% pertains to other industrial clients. As per financial performance, Effwa Infra & Research Limited has posted total income / net profits of Rs 104.61 Cr / Rs 4.59 Cr (FY22), Rs 115.41 Cr / Rs 5.13 Cr (FY23), and Rs 145.51 Cr / Rs 13.80 Cr (FY24). So as per previous financials data, company has shown good growth. Company has posted an average EPS of Rs 5.26 and average RoNW of 37.15% for last three fiscals. Issue is priced at a P/BV of 3.93 as per NAV of 20.84 as on 31.03.24. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 41.26, 37 and 13.75 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Shreni Shares Limited is associated with this SME IPO and handled 28 SME IPOs in last 3 years. From last 10 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 SME IPOs, two are trading below issue price and remaining are trading above issue price. ( As on 02.07.24 ) As per financials, Effwa Infra & Research Limited has shown average results, RoNW is 37.15% and P/E is respectively 41.26, 37 and 13.75 as per FY22, FY23 and FY24 earnings. So, issue looks fully priced. Order book is around Rs 526.25/- Cr as on 31.05.24. Company is engaged in the business of EPC integrated project management services in waste management and water treatment, which is highly fragmented and competitive business segment. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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