| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 279 to ₹ 294 | 50 | 22nd Jan, 2025 – 24th Jan, 2025 | ₹ 220.50 Cr |
About Denta Water and Infra Solutions Ltd IPO
Incorporated in 2016, Denta Water and Infra Solutions Ltd. (Denta Water) is a key player in water engineering, procurement, and construction (EPC) services with a successful track record in groundwater recharging and water management infrastructure projects. The company offers a wide range of services from design and engineering to project management and operations, with expertise in groundwater recharging using recycled water. The company significantly contributes to addressing the rising water demand in India with projects like the Byrapura and Hiremagaluru LIS Project, Karagada LIS Project, and others, which were executed through lift irrigation systems. Further, the company was involved in the KC Valley project, which helped Bengaluru build its reputation as the second-largest city in the world for treated wastewater capacity, improving the city’s water management and sustainability efforts. The company has been an active participant in water management projects, with 32 projects executed and 11 projects in the order book under the Government of India’s “Jal Jeevan Mission”. The company contracts have been awarded through competitive bidding undertaken by both the State and Central Governments. In addition to participating in government tenders, the company also undertakes projects as sub-contractors from private players. Apart from water projects, the company is also expanding its reach in railway and highway construction segment.
Objective of the Denta Water and Infra Solutions Ltd IPO
The company proposes to utilize the net proceeds raised through the issue for the following purposes:
- To meet working capital requirements of the company;
- General corporate purposes, subject to the applicable laws.
Rationale To Denta Water and Infra Solutions Ltd IPO
Strong order book in water management projects driving future growth
The company operates in the Indian water and wastewater treatment market, which is expected to grow to USD 23.9 billion in 2033 from USD 13.1 billion in 2023, and South India is expected to have a major share in this segment. Denta Water, a key player in the EPC segment, specializes in the design, installation and commissioning of water management infrastructure projects, with a focus on groundwater recharge projects. The company has successfully executed 32 projects in the past, such as Byrapura & Hiremagaluru LIS Project and Karagada LIS Project in Karnataka, with a completion timeline ranging from 24 to 36 months. Currently, the company has 17 ongoing projects with a contract value of Rs. 11,004.4 million, out of which Rs. 10,667.5 million is from water management projects. The company has completed a project worth Rs. 3,479.9 million, leaving an outstanding order book of Rs. 7,524.5 million. These outstanding projects are expected to be realized in two years. The company’s track record of timely project completion, efficient project execution, post-completion support and a strong order book enhances the company’s credibility in the industry.
Efficient asset-light business model driving operational excellence
The company has established an efficient business model, leveraging its industry knowledge and expertise to drive strong financial and operational performance. It focuses primarily on selected segments such as Groundwater Recharge (GWR), irrigation, and operations and maintenance (O&M) related to water projects, primarily in the state of Karnataka. This targeted approach provides the company with a competitive advantage during project award evaluations. The company follows an asset-light business model, emphasizing its project execution and management strengths, along with established relationships with clients, architects, and contractors. By focusing on development management, joint development agreements, and joint ventures, the company minimizes upfront capital expenditure compared to direct approaches. This model allows for the outsourcing of equipment requirements, with associated costs included in tender bids. The asset-light structure leads to efficient capital utilization, lower debt, and regular income, contributing to higher returns on capital employed. As of September 30, 2024, the company had a total working capital borrowing of Rs. 570.2 million in non-fund limits for bank guarantees required for its projects, with no other borrowings. The company’s asset-light model helps minimize initial costs, and its focus on development management and strong execution capabilities is expected to drive continued growth and business development.
Valuation of Denta Water and Infra Solutions Ltd IPO
Denta Water and Infra Solutions Ltd. operates in the Indian water and wastewater treatment industry, which is projected to reach USD 23.9 billion by 2033. The company, a key player in this industry, is set to benefit from this growing trend due to its strong track record, including 32 successful execution of water management projects, particularly in groundwater recharge (GWR) and wastewater management with projects like Byrapura and Hiremagaluru LIS. Currently, the company has an outstanding order book of Rs. 7,524.5 million, mainly from the government of Karnataka. Additionally, the company is focusing on diversifying its geographic footprints in high-potential regions like Gujarat, Madhya Pradesh, Maharashtra and Uttar Pradesh, which will reduce the reliance on Karnataka. The company follows an efficient, asset-light model that enhances project execution through joint ventures and development management. This approach reduces the capital expenditure and improves return ratios, resulting in the debt-equity ratio of the company for H1FY25 being 0. With the growing focus of the government on water reuse and recycling, Denta Water plans to leverage its expertise to capitalise on these trends and expand its participation in water conservation and infrastructure development projects. The company’s expanding portfolio, including ventures in railways and highways, further strengthens its position in the infrastructure sector, positioning it well for continued growth amidst evolving market conditions. Financially, the company has registered a revenue CAGR of 41.3% from Rs. 1,196 million in FY22 to Rs. 2,386 million in FY24. EBITDA grew at a CAGR of 23.4% from Rs. 518 million in FY22 to Rs. 791 million in FY24. Overall, Denta Water’s strategic focus on water management projects, growing market opportunities, and strong order book positions it well for future growth in water management and infrastructure sectors. Considering its valuation with a PE ratio of 9.5x based on FY24 earnings, we recommend a “SUBSCRIBE” rating for medium to long term investment.
What is the Denta Water and Infra Solutions Ltd IPO?
Denta Water IPO is a book built issue of Rs 220.50 crores. The issue is entirely a fresh issue of 0.75 crore shares. Login to your account now.
How to apply for the Denta Water and Infra Solutions Ltd IPO through StoxBox?
To apply for the Denta Water and Infra Solutions Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Denta Water and Infra Solutions Ltd IPO open?
Denta Water and Infra Solutions Ltd IPO is opening on 22nd January 2025. Apply Now
What is the lot size of the Denta Water and Infra Solutions Ltd IPO?
The Lot Size of Denta Water and Infra Solutions Ltd IPO is 50 equity shares. Login to your account now.
When is the Denta Water and Infra Solutions Ltd IPO allotment date?
The allotment Date for Denta Water and Infra Solutions Ltd IPO is 27th January 2025. Login to your account now.
When is the Denta Water and Infra Solutions Ltd IPO listing date?
The listing Date for Denta Water and Infra Solutions Ltd IPO is 29th January 2025. Login to your account now
What is the minimum investment required for the Denta Water and Infra Solutions Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,700. Login to your account now
What is the maximum investment allowed for the Denta Water and Infra Solutions Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 191,100. Login to your account now
What are the risks associated with investing in the Denta Water and Infra Solutions Ltd IPO?
- The company relies heavily on competitive bidding to win government projects, making its revenue source uncertain. These government projects contributed 84.0% of revenue in H1FY25 from 18.3% in FY13. This dependence on government contracts exposes the company to risks such as policy changes, project delays, and contract terminations, which could significantly impact revenue, profitability, and overall growth of the company.
- The company’s projects are subject to specific completion deadlines and delays due to unforeseen issues, financial problems, or government approvals. Currently, the company is experiencing time overrun in 10 out of 17 ongoing projects, which may lead to losing deposits, paying fines and higher costs, and could adversely affect the business and its financial results.
- The company relies on limited suppliers for raw materials and lacks long-term agreements with them, exposing the company to the risk of volatile raw material prices and supply shortages. If any supplier ceases to supply due to commercial disagreement or insolvency, the company may struggle to find alternatives, thereby impacting production, contracts, and financial performance.
When will the Denta Water and Infra Solutions Ltd IPO shares be credited to my Demat account?
The Denta Water and Infra Solutions Ltd IPO be credited to the account on allotment date which is 28th January 2025. Login to your account now
Where can I find the Denta Water and Infra Solutions Ltd IPO prospectus?
The prospectus of Denta Water and Infra Solutions Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Denta Water and Infra Solutions Ltd IPO?
| IPO Open Date | Wednesday, January 22, 2025 |
| IPO Close Date | Friday, January 24, 2025 |
| Basis of Allotment | Monday, January 27, 2025 |
| Initiation of Refunds | Tuesday, January 28, 2025 |
| Credit of Shares to Demat | Tuesday, January 28, 2025 |
| Listing Date | Wednesday, January 29, 2025 |
| Cut-off time for UPI mandate confirmation | 5 PM on January 24, 2025 |
