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Concord Enviro Systems is an integrated solutions provider for industrial waste water reuse and zero liquid discharge solutions, with an in-house position across the value chain. The IPO comprises a fresh issuance of equity shares worth Rs 175 crore and an Offer-for-Sale (OFS) valued at Rs 325.33 crore.

About Concord Enviro Systems:

• They are a provider of water and wastewater treatment and reuse solutions, including zero liquid discharge (“ZLD”) technology.
• ZLD systems are wastewater treatment solutions designed to recycle and recover clean water from industrial effluents, leaving behind solid waste or residue.
• They have in-house capabilities to develop solutions across the entire value chain including designing, manufacturing, installation and commissioning, operations and maintenance (“O&M”) and digitalization solutions including IoT.
• The sources through which they generate their revenue include
• (i) sale of systems and plants
• (ii) operations and maintenance of installed plants, and
• (iii) supplying consumables and spares for installed plants.
• Their reach extends to diverse regions with exports to countries in North America, Latin America, Africa, the Middle East, and Southeast Asia, serving 310 and 377 customers worldwide as of August 31, 2024 and March 31, 2024, respectively.
• Its manufacturing facilities are in Vasai, Maharashtra and Sharjah, UAE;
• Promoters Prayas Goel and Prerak Goel hold 27.96% and 17.60% aggregating to 45.56% of the pre-Offer Equity Share capital

Financials :Concord Enviro Systems IPO

Anchor: Concord Enviro Systems IPO

Concord Enviro Systems has allotted 21.41 lakh shares to 18 funds for a consideration of Rs 150.09 crore. Concord Enviro Systems, an environmental engineering solutions firm, has raised Rs 150 crore from anchor investors. ICICI Prudential Mutual Fund , Kotak MF, Bandhan MF, PGIM India MF, LIC MF, SBI General Insurance Company, Societe Generale and Morgan Stanley Asia (Singapore) Pte Ltd, are among the anchor investors.

Salient Points: Concord Enviro Systems IPO

• The Indian Water & Wastewater Treatment Market was valued at USD 7.3 bn in FY24 and is expected to grow at a CAGR of 12.0% between FY24-FY29P to reach USD 12.8 bn by FY29P, driven by economic imperative of efficient water management.
• Intensified concerns over water scarcity in the future will lead to stringent regulations on effluent treatment and are expected to prompt a significant shift towards reducing freshwater usage.
• Those selling shares in OFS are the promoters ; Prayas Goel and Prerak Goel, promoter groups — Namrata Goel, Nidhi Goel and Pushpa Goel and investor AF Holdings.
• The company offers its services to a diverse of set of customers across various industries like pharmaceutical, chemicals, food
• and beverage, defense & offshore, auto & auto ancillaries, steel and textile.
• As of Aug’24, the company has 289 domestic and 21 international customers.
• Use of Net proceeds

• Its business is organized as follows:

• Their revenue from operations is generated through three business verticals i.e. systems and plants, sale of consumables and spare parts and O&M services.

• 40% of revenue is from exports.
• Peers

• PE (FY25 annualized) 22.9x ; PE FY24 28.4x.
• Zero liquid discharge (“ZLD”) systems are wastewater treatment solutions designed to recycle and recover clean water from industrial effluents, leaving behind solid waste or residue. . As of FY24, it is amongst the 2^nd largest ZLD solutions providers in India in terms of revenue and a major Indian manufacturers of offshore de-salination systems.
• Order book for stands at Rs. 502 cr, to be executed over the next 1 year.
• On flip side Capacity utilization is low at 40% at both India and Sharjah plants.
• It caters to industrial customers while other players cater to municipal business as well where margins are better.
• Business in characterized by Long Working Capital Cycle
• Two Promoters who have quite less remuneration are now set to draw Rs. 2.4 cr each, which will impact profit.
• I intend to apply in Concord Enviro Systems IPO even as listing gains can be limited due to valuations. The valuation, compared with peers, appears to be OK, along with a slightly better margin profile. This is negated by its micro cap size and long working capital cycle which limits the upside gains. Indusial waste water treatment sector is expected to do well .
• GMP as reported in media is Rs. 70 (10%)
• This post is exploratory and educational purposes only.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.