New Delhi: Amid the ongoing subscription for the initial public offering (IPO) of SBI Cards and Payment Services Ltd, a second public offer has opened for investors today. Antony Waste Handling Cell has launched its IPO in order to raise around Rs 203 crore.
Antony Waste is an emerging player providing a full spectrum of Municipal Solid Waste (MSW) management services and is one of the top five players in the Indian industry.
The issue consists of a fresh issuance of shares worth of Rs 35 crore and an offer for sale (OFS) of up to 57 lakh equity shares by investors Leeds (Mauritius), Tonbridge (Mauritius), Cambridge (Mauritius) and Guildford (Mauritius).
The price band of the Antony Waste Handling Cell IPO has been set at Rs 295-300 per share, while the lot size has been fixed at 50 equity shares. The company successfully raised Rs 60.94 crore from three anchor investors on 3 March at a price of Rs 295 per share.
If you are also planning to subscribe to the Antony Waste IPO, here’s a look at what brokerages are suggesting:
Samco Securities says “Avoid”
“Antony Waste Handling Cell is a comparatively smaller IPO compared to the behemoth SBI Cards and due to the time clash, we feel that Antony Waste’s IPO will not get traction. Fundamentally too, this company has delivered poor growth in the past three years. To add to it, it is completely dependent on the government for its revenues as top five of its clients contribute over 90% of its revenue. Hence it faces high concentration risk,” Nirali Shah, senior research analyst at Samco Securities, told Moneycontrol.
“Investors can keep this stock in their watchlist and take positions depending on the company’s performance in the future. Hence, Antony Waste Handling is an unsubscribe at the moment,” she added.
Prabhudas Lilladher says “Avoid”
Brokerage firm Prabhudas Lilladher also recommended an ‘avoid’ rating on Antony Waste IPO given factors such as low growth in revenue (around 7.7% compounded annual growth rate, or CAGR) and profit after tax (16.5% CAGR) over FY16-19, highly competitive local markets, national and international players, large dependency on projects from state government authorities primarily municipal corporations (unstable allocation of municipal solid waste management) and rich valuation.
Choice Broking says “Avoid”
Despite the sector’s favourable outlook, the performance of Antony Waste is not encouraging, which has been marred by stagnant growth and higher receivables. The issue size is below Rs 250 crore, so the listing will take place in 'T' group, thereby eliminating any speculating bets post-listing. Thus, we feel that valuation is stretched and assign an “avoid” rating for the issue, said Choice Broking.
Angel Broking stays “Neutral”
Antony Waste was unable to perform on topline and bottomline fronts over FY17-19, said Angel Broking. Hence the brokerage believes that concerns regarding the company's financials exist.
Further, the business involves working capital and receivables risk from municipalities, which restricts future growth opportunities. Despite the lower pre-issue P/E at 10.1x 1HFY2020 annualised earnings (at the upper end of the issue price band), we recommend a neutral rating on the issue, said Angel.
Geojit Securities says “Subscribe”
Geojit Securities is the only brokerage that advised subscribing to the issue, only with a long-term perspective, given the positive industry outlook and uptick in revenues from FY20.
At the upper price band of Rs 300, Antony Waste is available at P/E of 10x FY20 (annualised). Valuation looks justified, considering the expected growth in earnings over the next few years, it said, adding that the long-term nature of projects (ranging from 5-25 years) gives visibility for consistent revenue generation in future.
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