GEM Enviro Management Limited ('GEM') was established in the year 2013 for collection and recycling of all kinds of Packaging waste including the Plastic Waste. Subsequently, the company diversified to implementation of Plastic Extended Producer Responsibility Programmes for various organization (to fulfill their obligations as per PWM Rules 2016 and amendments) and which has become the largest Business vertical of the Company (contributing to 82.41% of revenue in the year 2022-2023). Collection and recycling of Industrial Plastic Waste contributed to 17.42% of revenue and Sales and marketing of recycled products contributed to 0.18% of revenue in FY 2022-2023. Further in year 2023-2024 the company has ventured into new additional businesses in the field of Sustainability and as on today the Company provides following Services: 1. EPR consultancy and fulfilment for Plastic Waste 2. Collection and recycling of Industrial Plastic Waste 3. Sales and Marketing of recycled products 4. ESG Consulting and BRSR (Business Responsibility and Sustainability Reporting) Company was engaged in trading of plastic waste material and trading of the merchandise manufactured out of the waste recycling. The company was committed to sustainable plastic waste management and environmental stewardship, providing a basket of services to its customers that includes but not limited to plastic waste collection and sorting, recycling and repurposing, waste trading, providing environment consultancy etc. GEM offers EPR consultation services to PIBO's for registration and fulfilling of their obligation as per PWM 2016 and amendments. GEM ensures compliance of PIBO's with regulatory requirements and streamlines the operational aspects of EPR implementation. The team of professionals specializes in providing comprehensive solutions, including evaluating registration requirements, assisting in the application process, representing clients before authorities, resolving ambiguities, CPCB portal management and aiding in annual filings. As per financial performance, GEM Enviro Management Limited has posted total income / net profits of Rs 25.60 Cr / Rs 5.83 Cr (FY21), Rs 32.91 Cr / Rs 7.45 Cr (FY22), Rs 42.80 Cr / Rs 10.01 Cr (FY23) and Rs 26.39 Cr / Rs 8.40 Cr (upto Q3 FY24). So as per previous financials data, company has shown average results. Company has posted an average EPS of Rs 4.01 and average RoNW of 56.36% for last three fiscals. Issue is priced at a P/BV of 5.09 as per NAV of 14.75 as on 31.12.23. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 22.69, 16.88 and 15.09 respectively, which looks fairly priced. As per RHP, there is a no listed peers. On BRLM's front, two lead managers are associated with this IPO, and have handled around 17 IPOs in last three fiscals. On BRLM's front, Share India Capital Services Private Limited is associated with this SME IPO and handled 10 SME IPOs in last 3 year. From last 10 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 SME IPOs, all trading above issue price and remaining are trading above issue price. ( As on 12.06.24 ) On BRLM's front, Fintellectual Corporate Advisors Private Limited is associated with this IPO and this is first SME IPO from the BRLM. As per financials, GEM Enviro Management Limited has shown good results, RoNW is 48.57% and P/E is respectively 22.69, 16.88 and 15.09 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced. Company is in business of implementation of Plastic Extended Producer Responsibility Programmes for various organization. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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