EMS Limited

EMS Limited is in the business of Sewerage solution provider, Water Supply System, Water and Waste Treatment Plants, Electrical Transmission and Distribution, Road and Allied works, operation and maintenance of Wastewater Scheme Projects (WWSPs) and Water Supply Scheme Projects (WSSPs) for government authorities/bodies. WWSPs include Sewage Treatment Plants (STPs) along with Sewage Network Schemes and Common Effluent Treatment Plants (CETPs) and WSSPs include Water Treatment Plants (WTPs) along with pumping stations and laying of pipelines for supply of water (collectively, 'Projects'). The treatment process installed at STPs and CETPs is compliant with Ministry of Environment, Forest and Climate Change of India norms and the treated water can be used for horticulture, washing, refrigeration and other process industries. Company has an in-house team for designing, engineering and construction. They have a team of 61 engineers who are supported by third-party consultants and industry experts to ensure compliance and quality standards laid down by the industry and government agencies & departments. They also have the own team for civil construction works thereby reducing dependence on third parties. The scope of the services typically includes design and engineering of the projects, procurement of raw materials, execution at site with overall project management up to the commissioning of projects. Post commissioning, operations and maintenance of these plants for a certain period of time is generally a part of the award in recent times. They have a team of dedicated engineers and personnel focused on operations and maintenance of completed projects. As on July 31, 2023, they are operating and maintaining 18 projects including WWSPs, WSSPs, STPs & HAM aggregating of Rs. 1,74,492.00 lakhs & 5 O&M projects aggregating to Rs. 9,928.00 lakhs. In the past, Company has executed 50 projects & 17 projects executed by the proprietorship which businesses was taken over by the Company on June 2012. The Order Book for Ongoing Projects is Rs. 1,74,492.00 Lakhs unbilled amount as on July 31, 2023. As per financial performance, EMS Limited has posted total income / net profits of Rs 336.18 Cr / Rs 71.91 Cr (FY21) and Rs 363.09 Cr / Rs 78.92 (FY22) and Rs 543.27 Cr / Rs 108.66 Cr (FY23). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 42.54 and average RoNW of 22.06% for last three fiscals. Issue is priced at a P/BV of 2.03 as per NAV of 103.8 as on 31.03.23. If we attribute latest earnings of FY22 on fully diluted equity post issue, then asking price is at a P/E of around 14.85 and as per FY23 earnings P/E is around 10.78, which looks fully priced. As per RHP, peers comparison is shown in above table. On BRLM's front, one lead managers are associated with this IPO, and have handled around 5 IPOs in last three fiscals. Khambatta Securities Limited : This is 6th IPO from this BRLM. From last 5 IPOs, all listed above issue price or at par on the day of listing. As of now, from last 5 IPOs, all are trading above issue price or at par. (As on 02.09.2023) As per financials, EMS Limited has shown good growth, RoNW is 22.31% and P/E is respectively 14.85 and 10.78 as per FY22 and FY23 earnings. So, issue looks fairly priced and company has order-book of around Rs 1,744.92 Cr. Company is in business of providing water and wastewater collection, treatment, and disposal services, which is highly fragmented and competitive 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.

• 1 Ramveer Singh
• 2 Ashish Tomar