Concord Enviro Systems, which provides solutions in the field of water and waste water management to global companies, plans to raise Rs 175 crore through a fresh issue to fund capital expenditure and to invest in overseas subsidiaries, and Rs 325 crore through an offer for sale by promoters and an investor.The promoter group's stake will fall to 51.4% after the IPO from 60.9%. The company has international operations and operates in a high potential sector. However, it needs to show consistency in financial performance. Risk averse investors therefore need to wait for a sustainable trend in financials before making an investment decision.BusinessEstablished in 1999, Concord Enviro has inhouse capabilities including designing, manufacturing, installation, commissioning, operating and maintaining water treatment facilities. It also offers data capture solutions and analysis platforms enabling troubleshooting and preventive maintenance of installed systems. As of August 2024, it had 289 domestic and 21 international customers across North and Latin America, Africa, Middle East and South Asia. It has manufacturing facilities in Vasai, Maharashtra and Sharjah, UAE. In FY24, exports contributed over 41% to revenue. The top customer contributed 35.9% to revenue in FY24 reflecting high client concentration. The company had an order book of Rs 501.8 crore as of August 2024 compared with Rs463.2 crore as of March 2024.FinancialsThe company earns over 60% of the annual revenue in the second half of a fiscal year, reflecting seasonality in business. The company’s financials over the past three years show an erratic trend. Revenue, for instance, moved to Rs 343.2 crore in FY23 from 329.4 crore in FY22 and then shot up to Rs 496.9 crore in FY24. Net profit slid to Rs 5.5 crore in FY23 from RS 16.5 crore in FY22 and then grew rapidly to Rs41.4 crore. The operating margin before depreciation and amortisation (EBITDA margin) was 18.7%, 14.5% and 16.3% in three years through FY24.ValuationSince the majority of the company’s revenue is realised in the fourth quarter of a fiscal year, it will not be appropriate to use the earnings data for the first five months of the year for valuation. Considering FY24 numbers, the company demands a price-earnings (P/E) multiple of upto 35. Another water and wastewater treatment company Enviro Infra Engineers, which was listed on November 29, demanded a P/E of around 22 at the time of the IPO. Its FY24 revenue and profit were Rs728.9 crore and 108.6 crore respectively. The stock has more than doubled since listing resulting in the FY25 forward P/E of 46 based on the annualised earnings in the first six months of the fiscal year.