Antony Waste Handling Cell lists at a strong premium; what should you do?

Antony Waste Handling Cell lists at a strong premium; what should you do?

NEW DELHI: Shares of Antony Waste Handling Cell debuted in line with the prevailing grey market expectations on Friday. But analysts said upside for the stock may be limited for here on.

The scrip got listed at Rs 436.10 on NSE, a 38.44 per cent premium over the issue price of Rs 315. On BSE, the stock got listed at Rs 430, up 36.51 per cent. The IPO was subscribed 15 times during the book building process.

Analysts said after such a listing, it makes sense to book profit, as the stock is unlikely to replicate the success of Mrs Bectors Food and Burger King, which were from the much ‘hotter’ food services sector.

“We are advising clients to book profit partially at the least. They should take some money off the table, as the stock has delivered strong returns of about 40 per cent,” said Astha Jain, Research Analyst at Hem Securities.

She said people who want to enter the counter should wait for a correction. They should not buy at the current level, as the valuation is already stretched, she said.

Before the IPO opened, analysts were divided on its prospects, with many saying people should subscribe for listing gains, while some others had recommended ‘avoid’ ratings.

At the pre-listing issue price, the company’s shares were valued at a P/E multiple of 26.1 times (to its restated TTM EPS of Rs 12.1), which is at a discount to the global peer average of 32.7 times. According to this calculation, Antony Waste is now quoting at comparable 36 times its earnings.

“The scrip is not as hot as the two recent IPOs from the food industry. But the sector has potential in the medium term. Out of India, investors have taken fancy to waste handlers. This is the first one in India. Though the stock has good medium-term potential, it is fairly valued right now,“ said Deepak Jasani, Head of Retail Research, HDFC Securities.

By 1.30 pm, over 20 lakh shares of the company changed hands on BSE with 30 per cent taking delivery, while 1.67 crore shares were traded on NSE.

This was the company’s second attempt to list. In March 2020, it was forced to scrap the IPO amid tepid investor response and extremely weak market sentiment.

“Antony Waste Handling Cell has good prospects in the growing MSW and renewable energy segment. The stock valuation is not very high, even considering the listing gains due to high RoE. However, high exposure to municipal orders and dependence on a limited number of clients can keep the stock in check in the short term,” said Vinod Nair, Head of Research at Geojit Financial Services.

Antony Waste Handling Cell claims to be one of the top five players in the Indian municipal solid waste (MSW) management industry, with an established track record of 19 years, providing a full spectrum of services which includes solid waste collection, transportation, processing and disposal services across the country.

In recent times, focus has shifted to invest in companies with good Environment Social Governance (ESG) track record and investing in a waste handler would have made some sense from that point of view, at least for institutional investors.

Expectedly, in the anchor investor round, seven schemes of SBI Mutual Fund — which had been advertising its ESG focus — along with MIT, Tata AIG General Insurance and 238 plan Associates had picked the company shares.

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