Denta Water IPO: The initial public offering (IPO) of Denta Water and Infra Solutions opened for subscription today, January 22, 2025. The issue, which is a book-built IPO, aims to raise Rs 220.5 crore through three days of bidding. Denta Water IPO will close for subscription on January 24, 2025.
Within half an hour of the opening, Denta Water and Infra IPO was fully subscribed by investors.
The offering is entirely a fresh issue of 7.5 million shares. Denta Water and Infra IPO has set a price band of Rs 279 to Rs 294 per share for the offering.
Ahead of the opening of the initial public offering, Denta Water and Infra Solutions raised a little over Rs 66 crore from anchor investors.
Foreign and domestic institutions who participated in the anchor included Abakkus Diversified Alpha Fund-2, Rajasthan Global Securities, Saint Capital Fund, Finavenue Capital Trust, Chhatisgarh Investments Ltd, Steptrade Revolution Fund, Astorne Capital VCC -- Arven and Aarth AIF. READ MORE
Meanwhile, most analysts have given a ‘Subscribe’ rating to the offering given the IPO’s reasonable valuations, the company’s strong order book, and healthy financials.
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Here is all details you need to know about Denta Water IPO:
About Denta Water and Infra Solutions
Denta Water designs, installs, and commissions water management infrastructure projects, with a strong focus on groundwater recharging initiatives. It offers operations and maintenance services for these projects and undertakes construction projects related to railways and highways.
According to analysts, Denta Water’s pivotal projects include the Byrapura and Hiremagaluru LIS Project, Karagada LIS Project, and the first phase of the KC Valley project.
Since its incorporation in 2016, Denta Water has completed 32 water management infrastructure projects for the Government of Karnataka (GoK).
As of November 30, 2024, Denta Water has procured direct contracts (as a consortium partner) worth Rs 774 crore, direct contracts (independent) worth Rs 46.99 crore, and sub-contracts worth Rs 465.72 crore in GWR projects.
Denta Water IPO price band and lot sizes
Denta Water IPO price band is set at Rs 279 to Rs 294 per share. The minimum lot size for investors is 50. Thus, the minimum amount that a retail investor needs to buy one lot of the IPO is Rs 14,700 (50 x 294).
Similarly, the minimum lot size for non-institutional investors (NIIs) is 14 lots (700 shares), leading to a minimum requirement of Rs 2,05,800 to buy one lot. As for qualified institutional investors (QIBs), the minimum lot size is 69 lots (3,450 shares) and the amount is Rs 10,14,300.
Denta Water IPO Subscription Status
Denta Water IPO has been a strong investor interest in the primary market. Within half an hour of the opening of the offer, Denta Water and Infra IPO has been subscribed 1.8 times. The portion set aside for retail investors has been subscribed 2.78 times, and that for NIIas have been subscribed 3 times.
Denta Water IPO grey market premium (GMP)
The company’s shares have been commanding a steady grey market premium (GMP) of Rs 165 per share since last week.
Denta Water IPO GMP today stands at Rs 165 per share, as of 8:50 AM on January 22, 2025, implying a listing gain of around 56 per cent at the upper end of the price band.
Denta Water and Infra IPO allotment, listing dates
As per the IPO timeline, Denta Water IPO will open for bidding on January 22, 2025 and close on Friday, January 24, 2025.
The basis of allotment for the IPO will be finalised on Monday, January 27, 2025. Denta Water IPo is expected to list on the NSE and the BSE on Wednesday, January 29, 2025.
Denta Water Financials
As per the company’s prospectus, its revenue from operations grew from Rs 119.5 crore at the end of FY22 to Rs 238.5 crore at the end of FY24. The Ebitda climbed from Rs 51.8 crore in FY22 to Rs 79.1 crore in FY24, while net profit surged from Rs 38.3 crore to Rs 59.7 crore during the period.
Denta Water IPO objectives
Denta Water aims to utilize the proceeds from the IPO to meet the working capital requirements of the company up to Rs 150 crore. The rest of the amount, it said, would be used for general corporate purposes, subject to the applicable laws.
Denta Water IPO review: Should you subscribe? What analysts say:
Canara Bank Securities | Neutral
Denta Water operates in the high-potential sector, having completed 32 projects in Karnataka and executing 11 more. Its asset-light subcontracting model ensures low capital expenditure and operational efficiency. With alignment to government initiatives like "Jal Jeevan Mission," the company has strong growth prospects.
That said, dependency on government clients has surged from 18.25 per cent in FY23 to 63.40 per cent in FY24, raising revenue stability concerns. Additionally, delays in 10 out of 17 ongoing projects highlight execution challenges that could impact growth prospects.
Auditor-raised concerns in restated financials and contingent liabilities of Rs 57 crore amplify financial risks. Further, Promoter C Mruthyunjaya Swamy, a former Karnataka PWD secretary, faced inquiries from the Lokayukta Police and Enforcement Directorate, with the possibility of reopened proceedings posing a threat to operations and reputation. Anonymous complaints alleging corrupt practices and misuse of authority remain unresolved, leaving the company vulnerable to future allegations.
SBI Securities | Subscribe
The company is valued at FY24 price to earnings (P/E) and enterprise value to Ebitda (EV/Ebitda) multiple ofc13.1x and 9.8x at post-issue capital of upper price band. The company’s revenue, Ebitda, ad PAT achieved CAGR of 41.3 per cent, 23.6 percent, and 24.8 per cent, respectively, to Rs 239 crore, Rs 79 crore, and Rs 60 crore during FY22-FY24 period.
The industry forecast indicates healthy growth for the Indian Water and Wastewater treatment market, which is projected to expand at a CAGR of 6.2 per cent for the CY24E-CY30E period. We recommend the investors to subscribe the issue.
Ventura Securities | Subscribe
The company has developed a strong reputation for its expertise in groundwater-related projects, which constitute the majority of its business. Its solutions are tailored to efficiently replenish groundwater resources using advanced technologies and recycled water.
Denta's robust pipeline of projects demonstrates its ability to manage large-scale and complex infrastructure initiatives.
SMIFS Ltd | Subscribe
With South India expected to dominate the water and wastewater treatment market, Denta’s regional presence, particularly in Karnataka, positions it advantageously for capturing the expanding opportunities in water management. The company's ongoing commitment to diversifying into other geographies such as Gujarat, Maharashtra, Madhya Pradesh, and Uttar Pradesh further strengthens its growth prospects.
With the Indian construction market growing rapidly at a CAGR of 17.26 per cent, Denta's strategic positioning in key infrastructure segments and its ability to execute large-scale water management projects provides an attractive investment opportunity.
We recommend subscribe to the issue as with a robust order book, strong execution capabilities, and an expanding total addressable market (TAM0, Denta is well-positioned to deliver sustained growth amongst peers.
BP Equities | Subscribe for long-term
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.
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.
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.