Antony Waste: Analysts expect stock to list at 31-38% premium to IPO price

Antony Waste is the second-largest player in the domestic municipal solid waste (MSW) management sector with a market share of around 9 per cent as of FY20.

Antony Waste Handling Cell is expected to make a decent debut on the exchanges on Friday, January 1, riding on the underlying bullish sentiment in the market but may fail to match up to the listing euphoria witnessed by some of its predecessors such as Burger King India or Mrs Bectors Food.

Shares of Antony Waste Handling were trading at a grey market premium (GMP) of Rs 100-120, up 31-38 per cent, in the unlisted market over the issue price of Rs 315, according to analysts. The debut, they say, may invite tepid response from investors and may not match up to the stellar listing gains given by Burger King and Mrs Bectors.

"Antony Waste is unlikely to achieve the same listing witnessed by issues prior to it such as Burger King or Mrs Bectors. While the issue was well subscribed, it is not a company where big funds would be much interested," explains Keshav Lahoti, equity research analyst at Angel Broking. Shares of Burger King India had listed at a premium of 92 per cent over the issue price of Rs 60 while those of Mrs Bectors Food debuted at a premium of 74 per cent.

An IPO grey market is one where a company's shares are bid and offered by traders unofficially. The price at which these shares are traded in a grey market is indicative of how the stock may perform after it gets listed at the bourses. Apart from a company's fundamentals, the underlying market sentiment also plays a pivotal role in guiding the listing gains or losses for the stock. Therefore, while the GMP is more or less an accurate indicator of listing gains, the actual stock listing may vary as relatively more investors trade in an actual market.

Umesh Paliwal, co-founder of Unlisted Zone also sees the listing around the same levels.

"After rising to as much as Rs 190, the market premium tanked to Rs 25 last week following the market crash as there were expectations that by the time IPO comes for listing, indices may have dipped more, leading to mayhem in the unlisted market. But as the market recovered, the premium for the stock also rose," says Paliwal.

In its second attempt to raise funds from the market, Antony Waste increased the IPO size to Rs 300 crore from Rs 200 crore earlier and received bids for 10,02,71,821 shares against its offer size of 66,66,342 shares. The retail individual investors (RIIs) quota was subscribed 16.55 times, qualified institutional buyers (QIBs) 9.67 times and non-institutional investors 18.69 times. Earlier in March 2020, the IPO had failed to sail through following poor response from investors and weak market conditions on account of Covid-19 pandemic.

The company is the second-largest player in the domestic municipal solid waste (MSW) management sector with a market share of around 9 per cent as of FY20. With increasing energy demand and government initiatives, the waste to energy (WTE) market is anticipated to see more public-private partnership based projects of which Antony could be a major beneficiary, analysts say.

While Astha Jain of Hem Securities expects the issue to list at a premium of 30 per cent or more to issue price, she recommends booking partial profit on listing day at around those levels.

"We are positive on the long term outlook of the company as it is a leading service provider in the MSW management sector with end-to-end capabilities. It also has a strong track record of project execution with diversified business model & access to technology backed vehicles and equipment enables the company to manage its operations efficiently," said Jain.

However, large dependency on projects from government authorities primarily Municipal Corporations, highly competitive market, untested and still emerging business model, huge capex required for growth and rich valuation are some of the key concerns for analysts.