Denta Water and Infra Solutions Ltd is set to launch its Denta Water and Infra Solutions Ltd IPO on January 22, 2025, with the subscription period closing on January 24, 2025.
Key Details of the IPO:
- Price Band: The shares are priced between ₹279 and ₹294 per equity share.
- Issue Size: The IPO comprises a fresh issue of 75 lakh equity shares, aiming to raise approximately ₹220.5 crore at the upper end of the price band.
- Lot Size: Investors can bid for a minimum of 50 shares and in multiples of 50 shares thereafter.
- Allocation: 50% of the issue is reserved for Qualified Institutional Buyers (QIBs), 35% for retail investors, and the remaining 15% for Non-Institutional Investors (NIIs).
Company Overview:
Established in 2016, Denta Water and Infra Solutions Ltd specializes in water Engineering, Procurement, and Construction (EPC) services. The company has completed 32 water management projects, including groundwater recharge initiatives, and has 22 ongoing projects as of October 2023.
Financial Performance:
In the fiscal year 2024, the company reported a revenue of ₹241.84 crore, up from ₹175.75 crore in 2023. The profit after tax stood at ₹59.73 crore in 2024, compared to ₹50.11 crore in the previous year.
Utilization of Funds:
Proceeds from the IPO will be utilized to meet working capital requirements amounting to ₹150 crore, with the remaining funds allocated for general corporate purposes.
Denta Water and Infra Solutions Ltd IPO Important Dates:
- Basis of Allotment: January 27, 2025
- Initiation of Refunds: January 28, 2025
- Credit of Shares to Demat Accounts: January 28, 2025
- Listing Date: January 29, 2025
Investors are advised to review the company’s financials and consult with financial advisors to assess the suitability of this investment in line with their risk profile and investment objectives.
Denta Water and Infra Solutions Ltd IPO Review
The upcoming IPO of Denta Water and Infra Solutions Ltd has garnered attention due to the company’s specialization in water engineering and its promising growth trajectory. Here’s a detailed review of the IPO:
Strengths:
(1) Sector Expertise:
Denta Water operates in the water EPC (Engineering, Procurement, and Construction) segment, a sector with increasing government and private investment due to water scarcity and the need for sustainable infrastructure.
(2) Strong Project Pipeline:
The company has completed 32 projects and is currently executing 22 projects. Its established track record in groundwater recharge and other water management services boosts its credibility.
(3) Revenue Growth:
- FY24 revenue: ₹241.84 crore (up from ₹175.75 crore in FY23).
- Profit after tax: ₹59.73 crore in FY24, a notable increase from ₹50.11 crore in FY23.
(4) Use of IPO Proceeds:
The allocation of ₹150 crore for working capital indicates plans to support ongoing and future projects, potentially driving growth.
(5) Positive Market Sentiment for Infrastructure:
The government’s focus on water conservation and infrastructure development aligns with the company’s core operations, offering potential long-term demand for its services.
Risks:
(1) Project Execution Risk:
Delays or cost overruns in large infrastructure projects can impact profitability and reputation.
(2) Dependence on Government Projects:
A significant portion of the company’s revenues may come from government contracts, which are subject to budgetary changes and delays in payments.
(3) Competitive Landscape:
The EPC sector has stiff competition from larger players with established market shares, potentially pressuring margins.
(4) Valuation Concerns:
With the price band set at ₹279–₹294 per share, investors should assess whether the valuation is justified by growth prospects.
Denta Water and Infra Solutions Ltd IPO Financial Snapshot
| Metric | FY24 | FY23 |
| Revenue | ₹241.84 crore | ₹175.75 crore |
| Profit After Tax | ₹59.73 crore | ₹50.11 crore |
| EBITDA Margin | ~25% | ~28% |
| Debt-to-Equity Ratio | Moderate | Moderate |
Subscription Recommendation:
- Short-term Investors: The IPO might attract listing gains due to its reasonable size and sector appeal.
- Long-term Investors: Those with a focus on infrastructure development and water solutions as a theme may find it worthwhile, provided they are comfortable with the associated risks.
Should You Invest?
- If you believe in the growth potential of water infrastructure solutions and the company’s ability to leverage increasing investments in the sector, this IPO could be attractive.
- However, due diligence on valuation and sector dynamics is essential, especially for retail investors with a low-risk appetite.
Denta water and infra solutions ltd Returns
Denta Water and Infra Solutions Limited is a Bangalore-based company specializing in water revitalization and groundwater recharging projects.
The company has demonstrated consistent financial growth over recent years. Below is a summary of its financial performance:
| Period Ended | Revenue (₹ Crore) | Profit After Tax (₹ Crore) | Net Worth (₹ Crore) | Total Assets (₹ Crore) |
| March 31, 2022 | 119.64 | 38.34 | 54.43 | 60.64 |
| March 31, 2023 | 175.75 | 50.11 | 104.55 | 123.28 |
| March 31, 2024 | 241.84 | 59.73 | 164.26 | 219.85 |
| September 30, 2024 | 98.51 | 24.20 | 188.46 | 220.35 |
These figures indicate a steady increase in revenue, profit after tax, net worth, and total assets over the observed periods.
In December 2023, Denta Water and Infra Solutions Limited filed for an initial public offering (IPO) with the Securities and Exchange Board of India (SEBI).
The IPO is scheduled to open on January 22, 2025, and close on January 24, 2025, with a price band set between ₹279 to ₹294 per share.
Denta Water and Infra Solutions Ltd IPO GMP
As of January 17, 2025, the Grey Market Premium (GMP) for Denta Water and Infra Solutions Ltd’s Initial Public Offering (IPO) is ₹45.
Understanding GMP:
The GMP indicates the premium at which the IPO is expected to list above its issue price. A GMP of ₹45 suggests that the market anticipates the shares to list at ₹324 (₹279 + ₹45) to ₹339 (₹294 + ₹45) per share, indicating a potential listing gain of approximately 15.31% to 15.56%.
Considerations:
- Market Volatility: GMP figures can fluctuate based on market conditions and investor sentiment.
- Investment Decision: While a positive GMP may indicate favorable listing prospects, it’s essential to evaluate the company’s fundamentals and align investments with your financial goals and risk tolerance.
Strengths of Denta Water and Infra Solutions Ltd IPO:
(1) Specialized Sector Focus:
- Denta Water and Infra Solutions Ltd operates in the growing water infrastructure sector, providing Engineering, Procurement, and Construction (EPC) services. This sector is vital for sustainable water management, including groundwater recharge, which is crucial as water scarcity becomes an increasing concern globally.
(2) Strong Track Record:
- The company has a proven history of completing 32 water management projects and has 22 ongoing projects. This established track record enhances investor confidence in its project execution capabilities.
(3) Governmental and Private Sector Demand:
- Increasing government investments in water conservation and infrastructure, especially in India, is expected to drive demand for water management solutions. The company’s services align well with these market trends, providing it with a potential competitive advantage.
(4) Revenue and Profit Growth:
- The company has demonstrated consistent revenue growth. For example, it reported ₹241.84 crore in revenue for FY24 (up from ₹175.75 crore in FY23) and ₹59.73 crore in profit after tax for FY24 (up from ₹50.11 crore in FY23). This growth indicates that the company has the ability to scale and maintain profitability.
(5) Strong Use of IPO Proceeds:
- The IPO proceeds will primarily be used for meeting working capital requirements (₹150 crore), ensuring the company can fund its ongoing and future projects effectively.
Risks of Denta Water and Infra Solutions Ltd IPO:
(1) Execution Risk:
- As an EPC company, Denta Water faces risks related to project delays, cost overruns, or underperformance in large-scale water infrastructure projects. Delays or failure to meet deadlines could negatively impact revenue and reputation.
(2) Dependency on Government Contracts:
- The company derives a significant portion of its revenue from government contracts, which are subject to budget constraints, political changes, and the risk of payment delays. Any reduction in government funding for water projects could impact its business prospects.
(3) Competitive Landscape:
- The EPC sector is competitive, with several larger, established players in the market. Denta Water’s ability to differentiate itself and maintain profitability in such a competitive environment will be crucial to its long-term success.
(4) Market Sentiment and Economic Factors:
- The company’s stock price and performance post-listing will depend on broader market conditions. Economic downturns, high inflation, or changes in policy related to water conservation or infrastructure spending could adversely affect Denta Water’s business.
(5) Valuation Concerns:
- While the company’s growth trajectory is promising, the valuation of the IPO might be seen as high by some investors. If market sentiment changes or if the company underperforms after listing, the stock price could face pressure.
(6) Debt and Liquidity Concerns:
- While the company has shown strong financial performance, any sudden changes in debt levels or liquidity issues could create financial strain, especially if working capital needs increase significantly.
Conclusion:
The Denta Water and Infra Solutions Ltd IPO presents an opportunity to invest in a company operating in a high-demand sector with solid growth potential. However, it comes with typical risks associated with project execution, government dependency, and sector competition. Investors should weigh these strengths and risks before making an investment decision, particularly considering the market’s broader economic conditions.
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