IPO Review - Antony Waste Handling Cell Ltd - ICICI Direct

Founded in January 2001, Antony Waste Handling Cell (AWHC) is one of the top five players in the Indian municipal solid waste (MSW) management industry with an established track record of more than 19 years. The company is a pioneer in MSW providing a full spectrum of services, which includes solid waste collection, transportation, processing and disposal services. AWHC is also one of the key players in landfill construction and management sector with in-house expertise on construction and management of landfills.

Investment Rationale

Strong operational portfolio

The company primarily undertakes specialised MSW collection & transportation (C&T) projects, MSW processing projects and mechanised sweeping projects for municipalities and private players. Having undertaken more than 25 projects as of November 15, 2020, of which 18 are ongoing, Antony has demonstrated a track record of a comprehensive service provider equipped with the resources to handle large-scale projects for municipalities and private players. Its portfolio of 18 ongoing projects as on November 15, 2020, comprises 12 MSW C&T projects, two MSW processing project and four mechanised sweeping projects. Antony's project portfolio is diversified across services provided, counterparties, project duration, nature of contracts and geographical areas where it operates.

Diversifying in emerging waste management areas

With increasing energy demand and government initiatives, the waste to energy (WTE) market is anticipated to see more public private partnership (PPP) based projects. AWHC believes that with assured raw material and a power offtake agreement, the business offers limited risks and will help in improving predictability of its cash flows. The company, through its step-down subsidiary ALREPL, has been awarded a contract for setting up and operating a WTE plant having a capacity of up to 1,000 TPD by Pimpri Chinchwad Municipal Corporation (PCMC).

Priced at P/E of 13.6x (post issue) FY20 on upper band

AWHC reported revenue, EBIDTA & PAT growth CAGR of 27.7%, 34.2% & 27.9%, respectively, in FY18-20. The company has maintained healthy return ratios that were upwards of 20%+ in the last three years. The Indian waste management industry is still at a nascent stage with a huge headroom for growth. Experienced promoters with strong domain expertise and focus on improving operational expertise would help AWHC tap the growing market of MSWM. The stock is available at 13.6x FY20 PE on a post issue basis at the upper band.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AntonyWaste_IPOReview.pdf

Source : Equity Bulls

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