Gurgaon-based Earthood Services Limited is poised to make waves in the financial markets as it gears up for its much-anticipated Initial Public Offering (IPO). A company celebrated for its pioneering efforts in Environmental, Social, and Governance (ESG) advisory, Earthood has officially filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). This move aims to raise ₹30 crore to fuel its technological advancements and further its corporate growth aspirations.
With sustainability becoming a pivotal aspect of corporate strategies worldwide, the IPO has piqued the interest of institutional investors, ESG enthusiasts, and retail investors alike. Let’s delve deeper into the specifics of this IPO, the company’s business model, and why Earthood is capturing so much attention.
The Financial Blueprint of the IPO
Earthood’s IPO, with a face value of ₹10 per equity share, is structured to include a fresh issue of up to 36 lakh equity shares and an offer for sale of up to 42 lakh equity shares by its promoters. This dual mechanism reflects the company’s strategic plan to raise capital while providing liquidity to existing shareholders.
Prominent shareholders Dr. Kaviraj Singh and Ashok Kumar Gautam are spearheading the offer for sale, with the former contributing 27.30 lakh shares and the latter offering 14.70 lakh shares. The IPO also includes a reserved portion for eligible employees, with a discount to encourage participation.
In a strategic pre-IPO placement, the company may raise an additional ₹10 crore, which will reduce the fresh issue size proportionately.
Utilization of IPO Proceeds
The proceeds from the fresh issue are earmarked for specific purposes:
- Technological Advancements: A substantial portion will be allocated to the development, ownership, and commercialization of proprietary intellectual property and solutions in the ESG domain.
- General Corporate Needs: The remaining funds will strengthen the company’s operational capabilities and bolster its balance sheet.
This targeted approach underscores Earthood’s commitment to innovation and scalability in the ever-expanding ESG services market.
A Glance at Earthood’s Journey and Achievements
Founded in 2012, Earthood Services has emerged as a leader in ESG advisory, led by Dr. Kaviraj Singh and Ashok Kumar Gautam, who bring over four decades of combined expertise in the energy, environment, and climate change sectors.
The company’s core offerings include:
- Lifecycle Assessments
- Sustainability Consulting
- Climate Risk Assessments
- Detailed ESG Roadmaps
These services cater to a growing clientele both in India and internationally, with Earthood leaving a remarkable global footprint in over 132 countries.
Among its notable projects are:
- Certifying the Delhi Metro Rail Corporation’s Metro Bhawan as carbon neutral.
- Conducting environmental audits for the Indian Army’s Pulgaon military railway station, resulting in actionable steps to reduce carbon emissions.
Operational Excellence and Financial Growth
Earthood’s operational prowess is evident from its robust financial performance. For the fiscal year ending March 2024, the company reported:
- Revenue from operations: ₹46.79 crore, a remarkable growth of 44.46% from the previous year.
- Profit after tax: ₹19.34 crore, an impressive increase of 80.11% year-on-year.
- Operating EBITDA margin: 39.11%, showcasing strong profitability.
This growth trajectory was largely fueled by the surge in demand for carbon validation and verification services. Additionally, its ESG assurance and advisory services also played a crucial role.
Global Reach and Sectoral Focus
Earthood categorizes its carbon validation services into four core sectors:
- Renewable Energy
- Energy Demand
- Forestry and Agriculture
- Waste Management
With offices in India, the UK, Russia, Turkey, and the UAE, the company continues to expand its reach, reflecting the global demand for reliable ESG solutions.
IPO: A Strategic Investment Opportunity
The Earthood IPO is structured through the book-building process with the following allocation:
- 75% of the net offer is reserved for qualified institutional buyers.
- 15% is assigned to non-institutional investors.
- 35% is allocated to retail individual investors.
Unistone Capital Private Limited serves as the sole book-running lead manager, ensuring a seamless IPO process.
Why Earthood Services is a Compelling Investment
As the world shifts towards sustainable development and responsible corporate governance, the demand for ESG advisory services has skyrocketed. Earthood Services is uniquely positioned to capitalize on this trend, given its established expertise and a proven track record of delivering impactful solutions.
Furthermore, the company’s ability to consistently innovate and expand its service offerings makes it an attractive proposition for investors looking to ride the sustainability wave.
Earthood Services is more than just an ESG advisory firm; it’s a visionary organization dedicated to enabling sustainable progress. The upcoming IPO is a testament to the company’s growth ambitions and its commitment to technological innovation.
For investors, this IPO offers a rare opportunity to align financial goals with environmental and social impact, making it a potential win-win situation.
