Organic Recycling Systems IPO Review: Organic Recycling Systems Limited is coming up with its Initial Public Offering. The IPO will open for subscription on September 21, 2023, and close on September 26, 2023. 

This is an SME(Small and Medium-sized Enterprise) IPO and the company is going to be listed on the BSE SME platform.

In this article, we will look at Organic Recycling Systems IPO Review 2023 and analyze its strengths, weaknesses, financials and GMP. Keep reading to find out! 

Organic Recycling Systems IPO Review – About The Company

Incorporated in 2008, Organic Recycling Systems Limited is an engineering company focused on environmental solutions and provides waste management solutions across waste types and across the value chain. 

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The company’s Business verticals include The Build Own Operate Transfer (BOOT) model, the Engineering Procurement and Commissioning (EPC) model and the Supply of Key Equipment.

The company prioritizes the development of technologies that are strong, affordable, and kind to the environment. It has demonstrated its expertise in successfully operating one of India’s initial Waste to Energy (WTE) plants, which used anaerobic bio methanation technology.

Additionally, it has established a Municipal Solid Waste (MSW) processing and disposal facility in Solapur, Maharashtra to turn MSW into compost and power. The facility has been in operation since 2013, and the Swachh Bharat Mission and numerous other reports have identified it as one of the finest practices for MSWM case studies.

Organic Recycling Systems IPO Review – Industry Overview

India’s 28 cities generate an average of 0.39 kg of solid trash per person per day, with individual city totals ranging from 0.19 to 0.99 kg. The generation of waste per person in the country is reflected in this, with larger, wealthier cities producing more waste each day.

Waste Management is a huge opportunity in India due to its demographics and consumption pattern. The sector is in its growth stage with very few players having the right technology and capability to provide sustainable solutions

According to data from the CPCB Annual Report for 2018–19 and a case study on plastic waste management by MOUHA, the amount of MSW generated each day in India is approximately 1.5 lakh tons, while the amount that is treated each day is approximately 0.5 lakh tons. The amount of plastic waste generated each day is approximately 0.26 lakh tons, while the amount that is treated each day is approximately 0.15 lakh tons, with a total market opportunity of up to 60 billion dollars until 2025.

Organic Recycling Systems IPO Review – Financials

If we look at the financials of Organic Recycling Systems Limited we find out that their assets have increased from ₹102.72 crores in March 2021 to ₹119.31 crores in March 2023. 

Their revenues also follow a similar trend, increasing from ₹1,5.78 crores in March 2021 to ₹25.34 crores in March 2023. With the rise in its revenues, the company has managed to turnaround from loss and reported a net profit of ₹3.65 crores.

In terms of return ratios, it has a ROE of 21.76% and a RoCE of 13.06% as of FY23. A high ROE suggests a good return on the capital invested by the shareholders. The Roce of the company is low as a result of a large amount of debt in the company.

A debt-to-equity ratio of 2.7 further adds on to the point that the company has huge debts.

Peers of the Company

The Indian waste management market is experiencing robust growth due to high population density and increased industrial activity, leading to significant waste generation.

Currently, there are around 20-30 participants in the market offering various services. Some of the participants primarily focus on logistics providing only transportation and fleet management services. Whereas there are some which also concentrate towards infrastructure and environmental services. The company’s main competitors are those entities which are involved in disposing of municipal waste

Strengths of the Company

  • The company is one of the forerunners in introducing the Thermophilic Anaerobic Bio methanation Technique for Municipal Solid Waste Management in India. The company has further developed technologies based on techno-commercial feasibility and client requirements such as LIPH-AD technology, a low-cost anaerobic digestion process, MARUT – Pulverising and homogenising technology and many more as per the waste sector demands. 
  • The company has penetrated into multiple business verticals including Product Vertical, Consulting vertical and project development and technology Licensing with the Engineering Procurement and Construction (EPC) division
  • The management team has earned the Company a positive reputation among customers. They have played a crucial role in the Company’s growth by quickly responding to market opportunities, adapting to changes in the business landscape and customer demands, and introducing innovative strategies for business and marketing.
  • As per the data collected from the CPCB Annual report and the Plastic waste management case study by MOUHA, there is a huge difference between the waste generated and the waste treated in a day. This gives the company a market opportunity of up to $60 Billion until 2025

Weaknesses of the Company

  • The company is dependent on municipal authorities for a substantial portion of its revenue. Since many municipalities struggle to pay for various solid waste management initiatives out of their own tax revenues and are heavily reliant on grants from the state or the federal government, this could have an effect on the business.
  • The company is dependent on a limited number of customers for a significant portion of its revenue. The loss of any of these major customers can adversely affect the business.
  • The company requires huge working capital requirements to run its operations. The inability to meet the working capital needs can adversely affect the business.
  • The ability of the company to negotiate the standard form of Municipal contracts for its projects may be limited. Thus, any unusual or onerous provisions may be imposed on the company which may restrict its flexibility.
  • The company is exposed to significant cost variations on fixed-rate contracts. Some of these costs include increases in the cost of equipment; materials or manpower, delays due to non-receipt of client approvals; delays associated with the delivery of equipment and materials to the project site

Organic Recycling Systems IPO Review – GMP

Currently exact information on the GMP is not available, we shall update the article once we receive the information.

Organic Recycling Systems IPO Review – Key IPO Information

IPO Size₹50.00 Cr
Fresh Issue₹50.00 Cr
Offer for sale
Opening dateSeptember 21, 2023
Closing dateSeptember 26, 2023
Face value10 per share
Price₹200 per share
Lot size600
Minimum lot1(600)
Maximum lots1(600)
Investment Amount₹120,000
Listing DateOctober 5, 2023

Promoter: Mr Sarang Bhand

Book Running Lead Manager: Arihant Capital Markets Limited

Registrar to the Offer: Maashitla Securities Private Limited

The Objective of the Issue

The net proceeds from this issue will be utilized for the following purposes:

  • Reduction of the Company’s total outstanding borrowings.
  • General corporate purposes.

In Closing

In this article, we looked at the details of Organic Recycling Systems IPO Review 2023. We can conclude that, with the government increasing its waste management facilities, the company has a good opportunity to grow in the future.

Organic Recycling Systems is an SME(Small and Medium-sized Enterprise) IPO which is different from the mainline IPO as the investment required, and the Lot size of the share is larger. The minimum investment required and the Minimum/Maximum lot size for this IPO is ₹1,20,000(600 shares).

What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.

Written By Aaron Vas

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