Antony Waste Handling Cell Limited (AWHCL) IPO - Top 12 Things to Know

1. AWHCL is one of the top five players in the Indian Municipal Solid Waste (MSW) Management industry, providing a full spectrum of MSW services. It chiefly caters to municipal bodies, and has undertaken more than 25 large-scale projects over the course of nearly 2 decades, of which 18 are ongoing.

2. The Company provides a full range of MSW management services including Collection & Transfer (C&T), mechanized sweeping, waste processing and waste-to-energy. The current portfolio of projects comprise 12 C&T projects, two MSW processing projects and four mechanized sweeping projects.

3. The project portfolio is diversified across multiple municipalities in urban and semi-urban areas, thus minimizing counter-party risk. The projects also have different time periods and thus expire at different times, creating a staggered revenue stream. Moreover, more than 75% of the contracts have cost escalation clauses built-in to reduce financial risk.

4. There are very high entry barriers in MSW management. New entrants face challenges to participate in municipal tenders since most of the tenders have criteria to showcase prior years of experience into waste handling and waste management industry along with a strong financial background.

5. Urbanization, changing lifestyle patterns and increasing disposable incomes have contributed to waste generation in urban India. MSW generation is expected to grow at a CAGR of 8.9% to reach 115mn tons per annum by FY25. The MSW Management market is expected to reach INR 98bn by FY25 at a CAGR of 14.4%.

6. There is also a huge opportunity in converting existing dump yards into sanitary landfills. As per Central Pollution Control Board, there are 1,247 dump yards across India of which only 2 have been converted into scientific landfills, in Shillong and Hyderabad.

7. The Company is a key player in construction and management of scientific landfills, with in-house expertise. It operates and manages the Kanjurmarg landfill, which is one of the largest single location waste processing plants in Asia. The site makes use of bioreactor technology and at present handles ~5,000 tons of waste per day. Over the next few years, 70% of the waste generated in Mumbai will be handled by the Kanjurmarg site.

8. AWHCL's intends to continue bidding for rationally selected MSW projects to expand its geographical footprint. The Company currently clusters its projects geographically to improve efficiency by leveraging the manpower and equipment set up at nearby sites, thus achieving economies of scale.

9. The company also aims to move up the MSW value chain and diversifying into emerging areas of waste management such as Waste-to-Energy and bio-mining. The Company also believes that there is a readily available market for its refuse derived fuel (RDF) and compost, which are generated at its Kanjurmarg site as byproducts of waste processing.

10. AWHCL has also been awarded a contract for setting up and operating a Waste-to-Energy (WTE) plant having a capacity of up to 1,000 TPD by PCMC. It intends to continue to bid for commercially viable WTE projects from financially strong municipalities and private players.

11. The Company reported a revenue CAGR of 27.73% from FY18 to FY20, and an EBITDA CAGR of 28.65% which shows margin expansion. The FY20 performance was particularly robust on account of the operations ramping up at the Kanjurmarg site.

12. The Offer comprises a fresh issue and an offer for sale by the private equity investor. The proceeds of the fresh issue will be used for part-financing the PCMC WTE project (~40Cr), reduction of indebtedness (~38.5Cr) and general corporate purposes.

Source : Equity Bulls

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