Denta Water & Infra Solutions Ltd IPO | News | Overview | Verdict

IPO listed on 29 Jan'25

Denta Water & Infra Solutions Ltd

Minimum Investment

₹ 14,700 / 50 shares

Grey market premium

₹ 72 (25% premium)

Issue price

₹ 294

Listing price

₹ 325

Listing gains

31 (11%)

Listing on

Jan 29, 2025

Our Verdict:

Denta Water & Infra Solutions Ltd (DWISL) has shown impressive growth in revenue and profits in recent years and boasts the highest margins among its peers.
The Indian water and wastewater treatment market is expected to grow at a healthy CAGR of 6.2% from 2023 to 2033, providing promising opportunities for DWISL, which focuses on water management projects.
With a P/E ratio of 9.5 based on FY24 earnings, the IPO appears attractively priced. Furthermore, the grey market premium (GMP) suggests a strong listing performance.
Considering the company’s robust order book, consistent financial performance, and industry-leading margins, investors may consider subscribing to the IPO from a long-term perspective.

About the company

Founded in

17 Nov'16

Managing director

Manish Shetty

DWISL is a leading player in water engineering, procurement, and construction (EPC), specializing in groundwater recharging and lift irrigation projects. It is one of the few Indian companies with expertise in designing, installing, and maintaining groundwater recharging systems using recycled water.
DWISL also undertakes infrastructure projects in railways (upgrading infrastructure) and highways (roads and bridges construction).

STRENGTHS

Proven Track Record: As of November 30, 2024, DWISL has successfully completed 35 projects worth Rs 238 crore, with no instances of time or cost overruns.
Established Expertise: DWISL has built a strong reputation in water management solutions, particularly in groundwater recharge (GWR) and lift irrigation projects. By November 30, 2024, the company secured contracts totalling Rs 774 crore as a consortium partner, Rs 47 crore as an independent contractor, and Rs 466 crore as a subcontractor in GWR projects.
Robust Order Book: With a total contract value of approximately Rs 1,100 crore, DWISL has completed work worth Rs 348 crore and maintains an outstanding order book of Rs 752 crore, ensuring solid revenue visibility.
Impressive Financial Growth: DWISL has demonstrated robust financial performance with a compounded annual growth rate (CAGR) of 41% in operational revenue, 24% in EBITDA, and 25% in net profit between FY22–FY24.
Superior Financial Metrics: As of FY24, DWISL outperforms its listed peers with an EBITDA margin of 33.29% and a PAT margin of 25.03%. Additionally, the company boasts a high Return on Equity (RoE) of 36.36% and a Return on Capital Employed (RoCE) of 76.99%, reflecting its strong financial position.

RISK FACTORS

Regulatory Complaints: Anonymous complaints filed with SEBI and other authorities against DWISL and its promoter, C. Mruthyunjaya Swamy, allege corrupt practices, misuse of authority, and influencing officials to secure contracts. Further developments in these complaints could adversely impact the firm’s business and operations.
Dependency on Government Clients: DWISL heavily relies on government clients for revenue, with contributions increasing from 18.25% in FY23 to 63.4% in FY24. Furthermore, nearly 84% of its revenue in H1FY25 came from the Government of Karnataka.
High Attrition Rate: DWISL has faced considerable attrition among Directors and Key Managerial Personnel, including the resignation of two Chief Financial Officers in the past year. Challenges in retaining key personnel could adversely affect its operations, financial performance, and cash flow management.
Client Concentration: A significant portion of DWISL's revenue is derived from a few key clients. As of FY24, the top ten customers accounted for 69% of the total revenue, exposing the firm to client concentration risk.
Cash Flow Concerns: DWISL has reported negative cash flows from operating activities in H1FY25 and FY22. Continued negative cash flow trends could hamper the firm’s operational efficiency and financial stability.

Financials

All Values are in Cr.

Issue details

Issue type

Mainstream

Issue size

₹ 220.50 crore

Fresh Issue

₹ 220.50 crore

OFS

₹

Price range

₹ 279 - 294

Lot size

50 shares

Issue Objective

The net proceeds from the issue will be utilised for the following purposes:

To finance the company’s working capital needs; and
General corporate purposes.

Dates

Bidding open

22 Jan'25

Bidding close

24 Jan'25

Allotment date

27 Jan'25

Refund date

28 Jan'25

Listing

29 Jan'25

IPO Reservations

Qualified institutional buyers

<50%

Non-institutional investors

>15%

Retail individual investors

>35%

Read the Offer Document

This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.

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