Greenleaf Enviro NSE SME IPO review (Not Rated)

•    The company is majorly engaged in providing EPC and turnkey solutions for waste water treatment such as STPs, ETPs.
•    The company marked growth in its top and bottom lines for the reported periods.
•    It is operating in a highly competitive and fragmented segment.
•    Based on its recent financial data, the issue appears aggressively priced.
•    Small paid-up equity base post-IPO indicates longer gestation period.
•    Only well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Greenleaf Envirotech Ltd. (GEL) is majorly engaged in providing engineering, procurement, construction (EPC) and turnkey solutions for Wastewater Treatment Projects (WWT) specifically in Sewage Treatment Plants (STPs) and Effluent Treatment Plants (ETPs) catering to private and public sectors. Its scope of services covers different stages of the WWT project lifecycle from design engineering, procurement, supply, installation, testing, commissioning and project management. The company also provide operations and maintenance (O&M) and annual maintenance contract (AMC) services for WWT projects on standalone basis.

The Company also provides environmental laboratory and consulting services through a dedicated facility located in Surat, Gujarat. Its laboratory is duly recognized under the Environment (Protection) Act, 1986 and operates in compliance with applicable regulatory standards. The laboratory is staffed with a team of qualified professionals including quality manager, technical manager, laboratory chemists, microbiologist and field chemists, who is responsible for testing and analysis. 

The company provides comprehensive environmental testing and reporting services for industrial and infrastructural facilities by analysing environmental parameters that impact air, water, soil and noise, enabling clients and regulatory authorities to assess compliance, identify risks and implement corrective actions where necessary. We are also recognized by the Gujarat Pollution Control Board as a Schedule II Environmental Auditor for carrying out the Environmental Audit under their environment audit scheme.

The Company also provides fire and safety services where we supply and refill fire extinguisher for our clients. We also provide annual maintenance contracts for such services in industries and commercial complexes. As of March 31, 2025, it had 123 employees on its payroll and an additional 22 contract workers.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 1610000 equity shares of Rs. 10 each at a fixed price of Rs. 136 per share to mobilize Rs. 21.90 cr. The issue comprises of 1310000 fresh equity shares (worth Rs. 17.82 cr.), and an Offer for Sale (OFS) of 300000 equity shares (worth Rs. 4.08 cr.). The IPO opens for subscription on September 30, 2025, and will close on October 06, 2025. The minimum application to be made is for 2000 shares and in multiple of 1000 shares thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.15% of post-IPO paid-up equity capital of the company. The company is spending Rs. 2.59 cr. for this IPO process, and from the net proceeds of the issue, the company will utilize Rs. 1.86 cr. for capex on purchase of civil machines and equipments, Rs. 0.35 cr. for capex on purchase of laboratory equipments, Rs. 1.35 cr. for repayment/prepayment of certain borrowings, Rs. 9.00 cr. for working capital, and Rs. 2.67 cr. for general corporate purposes. However, as per the data given on page no. 109 and 110, the expenses are to the tune of Rs. 3.18 cr. (considering the OFS issue process).

The IPO is solely lead managed by Smart Horizon Capital Advisors Pvt. Ltd., while KFin Technologies Ltd., is the registrar to the issue. Rikhav Securities Ltd., is the market maker. 

After issuing initial equity shares at par value, the company issued further equity shares at a fixed price of Rs. 51.00 per share between May-June 2023. It has also issued bonus shares in the ratio of 4 for 1 in February 2023, and 5 for 4 in July 2023. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs, NIL, and Rs. 4.91 per share.

Post-IPO, company’s current paid-up equity capital of Rs. 4.62 cr. will stand enhanced to Rs. 5.93 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 80.64 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total Income/Net Profit of Rs. 26.58 cr. / Rs. 0.97 cr. (FY23), Rs. 32.64 cr. / Rs. 2.28 cr. (FY24), and Rs. 39.08 cr. / Rs. 4.70 cr. (FY25). The company marked growth in its top and bottom lines for the reported period. However, boosted top and bottom lines for FY25 (pre-IPO year) raise surprises and concern over its sustainability.

For the last three fiscals, the company has reported an average EPS of Rs. 7.24, and an average RoNW of 34.92%. The issue is priced at a P/BV of 5.06 based on its NAV of Rs. 26.87 as of March 31, 2025, and at a P/BV of 2.92 based on its post-IPO NAV of Rs. 46.61 per share.

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 17.17, and based on its FY24 earnings, the P/E stands at 35.42. Thus, based on its recent financial data, the issue appears aggressively priced.

The company has posted PAT margins of 3.66% (FY23), 7.01% (FY24), 12.09% (FY25), and RoE Margins of 43.37%, 44.09%, 46.68%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per offer document, the company has shown Felix Ind., Apex Ecotech, Effwa Infra, as its listed peers. They are currently trading at a P/E of around 29.2, 20.7, and 25.8 (as of September 30, 2025).  However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORDS:
This is the 12th mandate from Smart Horizon in the last two fiscals (including the ongoing one). Out of the last 10 listings, 1 opened at discount, 1 at par, and the rest with premium ranging from 0.81% to 90% on the date of listing.