Enviro Infra Engineers Ltd Rs 250
India is sitting on a water time bomb — 16% of the world’s population, but just 4% of its freshwater. Add to that the mountains of untreated sewage and solid waste piling up in every urban corner, and it’s clear: water and waste management aren’t just social necessities — they are multi year investment themes.
Enviro Infra Engineers Ltd (EIEL) plays directly into this transformation story.
The company listed in Nov 2024, raising ₹650 crore at ₹148 per share. Since then, the stock has already seen a smart move, currently trading around ₹250 — a 70% gain in less than a year. But is there more to go?
Let’s dig in.
What Does EIEL Do?
EIEL is a niche infra player focused on designing and building water and wastewater treatment systems for urban local bodies and state governments — all funded through flagship schemes like AMRUT, Jal Jeevan Mission, and Clean Ganga.
Its work splits broadly into:
- Waste Water Treatment Plants – 49% of FY25 revenue
- Water Supply Projects – 48%
- O&M services – just 3%, but with a strong ₹807 crore order book spread over 10 years
Execution is mostly EPC (87% of FY25 revenues), with some exposure to the Hybrid Annuity Model (HAM), where EIEL typically contributes 60% project funding, with government chipping in the balance, and earns annuity revenue over time.
Performance That Turns Heads
The numbers tell a story of explosive growth.
Up to FY25, its 5 year Sales, Ebitda, PBT CAGR was 58%, 93%, 102%, 3 Year CAGR was 68%, 75%, 39% and FY25 growth was 46%, 61%, 64%.
With an FY25 ROE of 18%, a debt/equity ratio of just 0.2x, and guidance of 35–40% growth for the next few years, growth in every conference call since listing, EIEL clearly punches above its weight.
Order Book & Pipeline – Plenty to Chew On
The order book, executable in 18 to 24 months, stood at ₹1,186 crore as of March 2025 — almost 1.1x FY25 topline. Add ₹5,000 crore of bids submitted, and the growth visibility looks quite promising. Even if EIEL wins just 25% of these bids (vs historical 35–40% win rate), that adds another ₹1,250 crore.
Why the Excitement?
- Large market opportunity: India’s water infra backlog offers decades of work. Yes, the industry is only projected to grow 6% annually as per Company’s own Presentation — but strong players can outperform the average.
- Higher margins than peers: EIEL clocks EBITDA margins of 22–24%, nearly double the 10–12% peers report. The edge? In-house design and execution.
- HAM provides margin kicker: Though capital-intensive, HAM projects yield higher IRRs. The company sensibly wants to cap this at 25% of its business.
- Conservative balance sheet: Low leverage, minimal capex needs going forward.
- Optionality in renewables: EIEL is exploring solar EPC. Could be a margin headwind — or, if managed well, a diversification lever.
So What’s the Catch?
- Big growth promise vs small industry: If the industry is growing at 6%, how will EIEL deliver 35–40%? Execution and market share gains, sure — but it raises eyebrows.
- In-house design and execution are good levers for margin expansion but double than peers — difficult to understand!
- Geographic concentration: Nearly 90% of revenues come from MP, Rajasthan, and UP. Any political or administrative delays in these states can hurt.
- Working capital-heavy business: Government contracts also mean slow payments, leading to 90+ working capital days.
- Limited listed history: Cannot be sure of execution versus guidance.
- Valuation is cheap compared to 35-40% growth guidance: At ₹250, the stock trades at 25x FY25 EPS of ₹10 — the asymmetry between valuation and projected growth could reflect underlying issues not yet in the public domain.
Bottom Line: High Risk.
Suitable only for small allocation by highly intrepid risk takers. For others, this is a ‘watchlist’ candidate — wait for more execution and disclosure before diving in.