Antony Waste Handling Company (AWHCL)is primarily engaged in the management of Municipal Solid Waste (MSW). It specifically provides its services to Indian municipalities through the collection, transportation, processing, and disposal of solid waste from these areas. Collection and transportation make up 60% of its revenue, while processing makes up the remaining 40% of it. Its shares are said to be listed on BSE and NSE on 17th March 2020.
This was after the bidding period was extended so it can match its IPO target of ₹206 crores by 16th March. The company cited the moratorium imposed on YES Bank in addition to major market volatility as the causes behind the extension. The issue for AWHCL IPO remained undersubscribed on Day 3 (Friday) of the bidding at 50%. The issue size was biddings for 48,20,508 of the company’s shares while the actual number of bids rose to a maximum of 24,08,850 company shares.
AWHCL IPO’s issue comprises an offer for sale (OFS) which is fixed at 57 lakh shares by Leeds (Mauritius) Ltd, Tonbridge (Mauritius) Ltd, Guilford (Mauritius) Ltd, and Cambrid (Mauritius) Ltd. A fresh issue of ₹35 crores also constitutes the main issue. This money is to be utilized to reduce borrowings the company undertakes for general corporate purposes. The book-running lead manager for the issue is Equirus Capital Private Ltd. The company has chosen to establish the price band for each issue at ₹295 to ₹300 per share.
However, since the bidding process opened on Wednesday, the IPO for Antony Waste Handling appears to be lacking both the frenzy and the buzz that SBI Cards IPO succeeded in generating in the same amount of time.SBI Cards is the largest issuer of credit cards in India. Credit card expenditures in India grew by 32% each year to a whopping ₹6.1 trillion between 2016 and 2020. Given its dominant position within the domestic market for credit cards with a strong parent company keeping tabs on it, SBI Cards is in an advantageous spot as the trend of digital payments continues to rise.
Investors with a long term horizon are latching on to considering SBI Cards IPO, as well as those with the desire for exposure to growing consumerism. AWHCL, on the other hand, has allocated most of its IPO growth to anchor investors and has garnered ₹60.94 crores from its three anchor investors. This primarily includes MIT (Massachusetts Institute of Technology) which contributes to 65.6% of AWHCL’s anchor book. Vantage Equity Fund has contributed to about 18% of the anchor investments and 238 Plan Associates LLC is contributing the rough equivalent of 16.4%.
In January of 2020, AWHCL had 1089 vehicles and 17 ongoing Municipal solid waste management projects across the country. It processes waste at Pimpri Chinchwad in Pune and Kanjurmarg in Mumbai. The Pimpri Chinchwad plant in Pune, with its 14-mW waste-to-energy plan, is set to begin operating from the financial year 2022. Even with these details publicly available as statements, investors do not seem to be as attracted to the stock. Senior research analyst as Samcro Securities Nirali Shah has her reasons for why investors do not seem to be gung-ho about AWHCL stock.
According to her opinion, in the past three years, the company has delivered relatively poor growth. Their IPO is also comparatively much smaller when compared to “the behemoth” SBI Cards. Since both IPOs were announced in close succession, she believes AWHCL IPO will not garner enough traction which has been taken away by SBI Cards IPO. Finally, Shah states that the top five clientele of AWHCL is contributing 90% of its revenue, hence, making it completely dependent on government authorities for its functioning and at risk of high concentration.
According to Angel One, the company’s working capital receivables risk is also high as its main source of profit is from municipalities across India. We at Angel are also of the opinion that since AWHCL was not able to deliver top-line & bottom-line performance from FY17 to FY19, this has contributed to the lag in investor bids for its shares. Further, future opportunities for growth are restricted, as the business AWHCL is engaged is at risk on the working capital and receivables front from municipalities.
According to LiveMint, one positive amidst all these expectations is that AWHCL might observe steady growth of about 15% in the coming years, as it contributes towards the Swachh Bharat Movement. As waste management is a growing business, few brokerages have a subscription rating on AWHCL stock. Finally, at its upper price band of ₹300, AWHCL stock is available at 10 times the price of its annualized earnings in the first half of FY2020.