Antony Waste Handling Cell Ltd. - Information Note

Antony Waste Handling Cell Ltd. - Information Note
by Nikita Bhoota 21/12/2020
This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so. This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.

Antony Waste Handling Cell Ltd. IPO

Issue Opens - December 21, 2020
Issue Closes - December 23, 2020
Price Band - ? 313-315~
Face Value: ? 5
Public issue : Primary Issue & OFS Aggregating up to 0.95cr shares#
Issue Size - ?300cr~
Bid Lot - 47 equity shares
Issue Type : 100% Book building
Post money Market cap of   ? 891cr - at upper price band

% Shareholding

Pre IPO

Promoter

51.1

Public

48.9

Source: RHP

Company Background

Antony Waste Handling Cell limited (AWHCL) is the second largest players in the Indian Municipal Solid Waste (MSW) management industry with an established track record of more than 19 years, providing full spectrum of MSW services which includes solid waste collection, transportation, processing and disposal services across the country, primarily catering to Indian municipalities (Frost & Sullivan Report). It is also among the key players in landfill construction and management sector with in-house expertise for construction and management of landfills in a scientific manner and is also present in the emerging waste management areas in India such as MSW based Waste to Energy (WTE; Frost & Sullivan Report). As on November 15, 2020, AWHCL portfolio comprised of 18 projects comprised of 12 MSW Collection & Transportation (C&T) projects, two MSW processing (including WTE) project and four mechanized sweeping projects. AWHCL currently operates the Kanjurmarg site, which is one of the largest single location waste processing plants across India. It owns a fleet of 1,147 vehicles, of which 969 were equipped with GPS technology.

Object of the Offer

The offer comprises of a Fresh Issue (?85 cr) and an Offer for Sale (?215cr at upper end of the price band) aggregating to ?300cr. The Selling Shareholders are not part of the Promoter and Promoter Group. Proceeds from the fresh issue are proposed to be utilized for (1) Part-financing for PCMC WTE Project through investment in Subsidiaries, AG Enviro and/or ALESPL, (2) Reduction of consolidated borrowings of the Company and Subsidiaries by infusing debt in Subsidiary - AG Enviro for repayment / prepayment of portion of their outstanding indebtedness and (3) General corporate purposes.

Financials

(? cr, unless specified)

FY18

FY19

FY20

H1FY21

Revenue from operations

276

284

451

207

EBITDA

70

76

126

52

EBITDA Margins (%)

25.3

26.9

27.9

25.0

Net Profit

29

27

42

20

Diluted EPS

13.5

12.5

27.5

7.7

ROE (%)

24.5

18.2

20.1

8.5^

P/E

23.4

25.3

11.5

--

Source: RHP, ^not annualized

Key Positives

  1. Strong track record of project execution AWHCL has established track record of more than 19 years in executing solid waste projects. It primarily undertakes specialized MSW C&T projects, MSW Processing projects and mechanized sweeping projects for municipalities and private players. It has demonstrated track-record as a comprehensive service provider equipped with the resources to handle large-scale projects. The company carefully selects its projects by taking into consideration key factors such as the potential for project clustering and operational risks as well as financial strength of the counterparty and overall financial viability of the project. The company strives to cluster its projects geographically to improve efficiency and profitability. By leveraging the manpower and equipment that is setup at nearby sites, AWHCL tries to rationalize managerial costs and overheads, thus achieving economies of scale. AWHCL also believes that its strong track record has enabled it to bid for, and be awarded, large-scale projects by their customers. AWHCL operates one of the largest single location waste processing plants in Asia at Kanjurmarg, Mumbai which has processed >7.63 million metric tons since its inception in 2010 till November 15, 2020 (Frost & Sullivan Report).


  2. Diversified business model with revenue Amongst AWHCL’s portfolio of 18 ongoing projects as on November 15, 2020, 12 are MSW C&T projects, two are MSW processing project and four are mechanized sweeping projects. Its project portfolio is diversified across services provided, counterparties, project duration, nature of contracts and geographical areas where AWHCL operates. As per the RHP, the average duration of the on ongoing MSW C&T projects, Mechanized Sweeping projects and MSW Processing projects including the extensions which have already been provided in the ordinary course of business is 7.7 years, 7 years and 23 years, respectively. The contracts entered across time periods have different tenures thus providing a staggered revenue stream. Further, As of November 15, 2020, 77.78% out of the current ongoing projects have an escalation clause embedded in the contracts with clients insulating the company from stress in margins in case cost increases.

Key Risk

  • Any decline in the budgetary allocation towards MSW projects will have a material adverse impact on AWHCL’s business, financial condition, and results of operations.


  • The COVID-19 pandemic, or any future pandemic or widespread public health emergency, could materially and adversely impact its business, financial condition, cash flows and results of operations.


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