Effwa Infra & Research Limited IPO: Here’s what you need to know

July 2024 welcomes another upcoming IPO with Effwa Infra & Research Limited, apart from Emcure Pharmaceuticals, Bansal Wire Industries, and others. This SME IPO comes with a fresh issue of 5,316,800 equity shares. The ₹51.27 crore SME IPO will be opened for subscription on July 5, 2024. The IPO will be open till July 9, 2024. 

In this article, we will take a detailed look at the Effwa Infra & Research Limited IPO, financials, and KPI details and analyse whether you should invest in it or not. 

About Effwa Infra & Research Limited

Established in 2014, Effwa Infra & Research Limited operates in the water supply and management sector. The company offers a multitude of services, including integrated project management, engineering, procurement, and financing in the water pollution and solid waste control segments, to name a few.

EIRL operates in domestic markets as well as international markets. In India, the company operates in various states, including Andhra Pradesh, Gujarat, Chhattisgarh, and Maharashtra, among other states. EIRL boasts a track record of completing 45 successful projects in the water management sector for both public and private companies. 

Effwa Infra & Research Limited: IPO details

IPO Date	July 5, 2024 to July 9, 2024
Face Value	₹10
Price Band (per share)	₹78 to ₹82
Lot Size	1600 shares
Total Issue Size	Up to ₹51.27 crore
Fresh Issue	Up to ₹43.60 crore
Offer for Sale	Up to ₹7.68 crore
Listing	NSE SME

For more information refer to the RHP document of Effwa Infra and Research Limited. 

Effwa Infra & Research Limited Financials: Past performance

Let’s take a brief look at the company’s financials over the last few years in terms of revenue, PAT, and debt, among other results. 

Results (₹ Lakhs)	31 Mar 2024	31 Mar 2023	31 Mar 2022
Revenue	14,551.46	11,541.36	10,461.67
Profit After Tax	1,380.06	513.04	459.99
Reserves and Surplus	1,932.01	2,123.32	1,610.28
Total Borrowing	1,406.44	1,623.01	1,026.11

Key performance indicators of EIRL

EIRL’s performance is strengthened by its key performance indicators. The company boasts a robust Return on Equity of 45.46% and a Return on Capital Employed of 40.99%, which clearly shows how efficiently shareholders have utilised funds and capital. 

The debt-to-equity ratio is also minimal, reflecting the company’s strong financial health. Below are the KPIs of EIRL to take note of if you are willing to apply for the IPO.

KPI	Values
ROE	45.46%
ROCE	40.99%
Debt/Equity	0.38
RoNW	37.15%
P/BV	3.93
PAT Margin (%)	9.51

Shareholding pattern

Promoter	Number of shares (pre-offer)
Dr. Varsha Subhash Kamal	90,93,811
Mr. Subhash Ramavtar Kamal	87,36,550
M/s Kamal Subhash HUF	01
Mr. Vijay Vasant Dauge	01

Effwa Infra & Research Limited: Fund objectives

EIRL, as the upcoming IPO has proposed to use the Net Proceeds to fund several objectives, including:

• Firstly, EIRL aims to strengthen their working capital, ensuring smooth day-to-day operations and financial flexibility. 
• Secondly, they plan to invest in new office equipment, enhancing their operational capabilities and efficiency. 
• Lastly, the company has allocated funds for general corporate purposes, providing a financial cushion for various business needs and unforeseen opportunities. 

 These objectives collectively showcase the company’s strategy to strengthen its financial position and maintain adaptability for future growth. Effwa Infra and Research gives potential investors a comprehensive picture of how the IPO proceeds will be utilised to accelerate the company’s growth through the objectives mentioned in the prospectus.

Should you apply for Effwa Infra & Research Limited IPO?

Pros 

• Expert promoters with industry experience:

Promoters of Effwa Infra and Research have 30 years of experience in the water supply and management industry. This expertise is reflected in EIRL’s ability to bid for contracts in a highly competitive market, resulting in a CAGR of 24.41% throughout the last 4 years. As of January 2024, the firm had produced ₹102 crore and had ₹198 crore in its order book. 

• Healthy financial risk:

The company carries a healthy capital structure, as EIRL boasts a debt-to-equity ratio of 0.38. This company has limited reliance on outside borrowings and has no key debt-funded capital expenses. Experts anticipate that the overall financial health of the company will remain stable in the medium term. 

• Diverse client base:

The company has a strong client base across India with reputed names like Tata Steel Limited, Indian Oil Corporation Limited, and ONGC, to name a few. The healthy pipeline of clients has helped Effwa Infra and Research maintain the order book and expand its presence in India. 

• Adequate liquidity in the future:

The company is expecting cash accruals of ₹11 crores in FY2026 with a minimal repayment obligation of 0.69 crores. According to CRISIL, the company will have sufficient cash and cash equivalents to meet repayment obligations as well as operations. 

Cons

• Operating requires extensive capital investment. 

Effwa Infra and Research operates in a capital-extensive manner, which is mainly driven by high debtors. EIRL is also required to keep extra deposits for business purposes. Working capital remains a major rating factor as it remains large for the company. 

• Vulnerability to activities based on tenders:

EIRL has increased in revenue from ₹48 crores in FY20 to ₹145.51 crores in FY24. However, the scale of operations is still moderate and relies on winning tenders to operate. 

Source: CRISIL

How do I apply for the Effwa Infra & Research IPO on Dhanush?

With Dhanush, you can easily apply for the EIRL IPO in just a few steps. 

Step 1: Open your account with zero charges with Dhanush.

Step 2: Log in to your Dhanush trading account and go to the Explore page.

Step 3: Next, select the “Apply IPO” option from the page.

Step 4: After that, select the price and the number of lots you want to apply for.

Step 5: Enter your UPI ID and click on Invest to make the purchase.

Step 6: Next, you will receive the mandate on your UPI ID, which you need to approve before 5 p.m. on the same day. 

Step 7: That’s it! You’ve now completed the process of applying for the IPO. 

To apply for this IPO create your Dhanush trading account.

Bottom line

Effwa Infra and Research Limited operates in the water pollution, management, and treatment segments. Although the sector is competitive, EIRL presents a promising opportunity; however, the company is still vulnerable to extensive working capital and a moderate scale of operations. If you are willing to apply for the EIRL IPO, do proper research and stay informed. 

Dhanush, powered by Ashika Group, is an online trading app that offers a perfect and seamless trading experience and is among the best in India. Enjoy competitively priced products, customer-centric service, data-driven methods, and thorough research analysis. 

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FAQs

1. When is the Effwa Infra and Research IPO’s listing date?

The Effwa Infra and Research IPO date is July 5, 2024, and the IPO is planning to be listed on July 12, 2024.  

2. When will Effwa Infra and Research IPO open?

The Effwa Infra and Research IPO will be opened on July 5 and closed on July 9, 2024. 

 3. When is the Effwa Infra and Research IPO allotment?

On July 10, 2024, the basis of the Effwa Infra and Research IPO will be finalised. By Thursday, July 11, the allotted shares will be credited to your account.