Enviro Infra Engineering IPO Allotment Likely on November 27; GMP Shows 35% Premium - Read Now

Enviro Infra Engineering IPO, with a target of Rs 650.43 crore, is subscribed 7.64 times by Day 2. GMP reflects a 35% premium at Rs 200 per share. Allotment will likely be finalized on November 27, with shares expected to list on November 29.

By Aayushi Dubey Nov 25, 2024, 14:42 IST

The much-anticipated Enviro Infra Engineering IPO has garnered significant investor interest, with the issue being subscribed 7.64 times by the end of Day 2. The IPO, which opened on November 22 and closes on November 26, aims to raise Rs 650.43 crore. The company is making waves in the grey market, where its shares are trading at Rs 200, reflecting a 35% premium over the issue price of Rs 148 per equity share.

Here’s a detailed look at the IPO’s subscription status, allotment timeline, grey market performance, and associated risks.

IPO Subscription Status: Strong Demand Across Segments

Enviro Infra Engineering IPO has witnessed enthusiastic participation from various investor categories. As of November 25 (Day 2):

Overall Subscription: 7.64 times.
Non-Institutional Investors (NIIs): Subscribed over 19 times.
Retail Investors: Subscribed 4.78 times.
Employee Section: Subscribed 9.5 times.

On Day 1, the IPO was subscribed more than 2 times. The employee section had received a subscription of 3.22 times, while the retail portion was subscribed 4.78 times. The NII segment showed consistent interest, subscribing nearly 3 times on Day 1.

IPO Allotment and Listing Dates

As per the tentative schedule, the allotment of shares for Enviro Infra Engineering IPO is likely to be finalized on November 27, with the listing on NSE and BSE expected to take place on November 29.

Investors who receive allotments can expect strong listing gains, considering the 35% premium indicated by the grey market premium (GMP).

Grey Market Premium (GMP): A 35% Premium Signals Optimism

In the grey market, Enviro Infra Engineering shares are trading at Rs 200, significantly higher than the issue price of Rs 148 per share. This translates to a 35% premium, reflecting strong demand and positive sentiment among investors. The GMP is often seen as an indicator of potential listing performance, and in this case, it highlights investor confidence in the company’s growth prospects.

Company Overview: Aiming for Growth in Infrastructure

Enviro Infra Engineering operates in the infrastructure sector, which requires substantial working capital and high cash flow. The company raised Rs 194.69 crore from anchor investors by selling 13.15 million shares, underscoring its ability to attract institutional interest.

However, the company’s operations are capital-intensive, relying on timely payments from clients to fund raw material purchases, equipment, and project execution.

Key Risks Associated with Enviro Infra Engineering IPO

While the IPO has received strong demand, there are risks investors should consider:

1. High Attrition Rate

The company has faced challenges with a high rate of employee attrition. According to its Red Herring Prospectus (RHP), local labor often prefers not to relocate to new work sites, leading to workforce instability.

2. Delayed Payments

Enviro Infra Engineering has a history of delayed provident fund (PF) and employee state insurance (ESI) payments. While the company cites operational reasons, such delays could affect employee trust and regulatory compliance.

3. Capital-Intensive Operations

As an infrastructure company, Enviro Infra Engineering relies heavily on working capital to manage raw materials, mobilize resources, and complete projects. Insufficient cash flow could adversely impact operations, especially during economic slowdowns.

Why Investors Are Betting on Enviro Infra Engineering

Despite the risks, several factors make Enviro Infra Engineering IPO attractive to investors:

Strong Grey Market Premium: A 35% GMP indicates positive sentiment and the potential for substantial listing gains.
Robust Investor Interest: The IPO’s 7.64x subscription reflects strong demand across all investor categories.
Strategic Industry Presence: Operating in a growing sector, the company stands to benefit from India’s increasing infrastructure development.

IPO Outlook and Investor Takeaway

The Enviro Infra Engineering IPO has captured the attention of retail and institutional investors alike. With listing gains likely, thanks to a robust GMP of Rs 200, the stock could prove to be a strong addition to investor portfolios.

However, potential investors should weigh the company’s risks—such as high attrition and capital requirements—against its growth opportunities in the infrastructure space. The tentative allotment date of November 27 and listing on November 29 will be crucial for those tracking this IPO.

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