Denta Water & Infra Solutions Ltd. (DWISL): IPO Review
Denta Water & Infra Solutions Ltd. (DWISL) is a key player in providing water engineering, procurement, and construction (EPC) services. The company specializes in groundwater recharging projects using recycled water, and it has carved out a unique niche in this essential sector.
Denta Water IPO: Key Details in Simple Terms
Denta Water & Infra Solutions Ltd. is launching its IPO to raise 220.50 crores. This is a book-built issue and consists entirely of fresh shares, with 75 lakh shares being issued.
Important Dates:
- IPO Opens: January 22, 2025
- IPO Closes: January 24, 2025
- Allotment Date: January 27, 2025 (tentative)
- Listing Date: January 29, 2025 (tentative), on BSE and NSE
Price and Investment Details:
- Price Band: Rs 279 to Rs 294 per share
- Minimum Lot Size: 50 shares
- Retail investors need a minimum investment of Rs 14,700.
- For small non-institutional investors (sNII), the minimum investment is 14 lots (700 shares) worth Rs 2,05,800.
- For big non-institutional investors (bNII), the minimum investment is 69 lots (3,450 shares) worth Rs 10,14,300.
This IPO offers an opportunity to invest in a growing company, but make sure to evaluate it carefully based on your financial goals and risk appetite.
Highlights of DWISL:
- Consistent Growth: DWISL has shown steady improvement in both revenue and profits over the years.
- Robust Order Book: As of November 30, 2024, the company had an impressive order book worth over 752 crore, with the majority of its contracts focused on groundwater-related projects.
- Competitive Industry: This segment is thriving, with many local players performing well. DWISL stands out due to its specialized expertise.
- Investment Opportunity: For informed investors, this IPO offers potential for medium to long-term growth.
About the Company DWISL
DWISL has earned a strong reputation in India’s water management sector. The company’s projects, such as the Byrapura and Hiremagaluru LIS Project, Karagada LIS Project, and the first phase of the KC Valley Project, have significantly contributed to addressing the country’s water scarcity issues. DWISL even played a role in Bengaluru becoming the second-largest city globally in terms of treated wastewater usage.
The company has also been a key contributor to the Government of India’s “Jal Jeevan Mission”, executing lift irrigation projects across Karnataka and neighboring regions. With a focus on infrastructure and water management, DWISL is well-positioned to benefit from India’s ongoing and future water conservation initiatives.
Why Groundwater Management Matters
India is the world’s largest consumer of groundwater, with 50% of the rural population relying on it for daily needs. However, excessive extraction has resulted in overexploited groundwater blocks and declining recharge levels. The Government of Karnataka has introduced large-scale recycling programs to tackle this issue, using treated municipal wastewater to indirectly recharge groundwater in drought-prone areas.
DWISL is at the forefront of this initiative, having completed 32 water management projects and currently handling 17 more, valued at over 1,100 crore. Of this, 752.45 crore remains in the pipeline, showcasing a strong growth trajectory.
DWISL IPO Details
DWISL is launching its maiden IPO, offering 75,00,000 fresh equity shares at a price band of 279 to 294 per share. The IPO will be open for subscription from January 22 to January 24, 2025, with shares expected to list on BSE and NSE.
- Fund Utilization: 150 crore will go toward working capital, with the remainder for general corporate purposes.
- Market Cap Post-IPO: The market cap is estimated at 784.98 crore (based on the upper price band).
- Valuation Metrics: The IPO is priced at a P/E of 16.22 (FY25 annualized earnings) and 13.14 (FY24 earnings). While the issue is fully priced, the valuation reflects the company’s consistent performance and sector potential.
Financial Performance
DWISL’s financials reflect solid growth:
- FY22: Revenue 119.64 crore; Net Profit 38.34 crore
- FY23: Revenue 175.75 crore; Net Profit 50.11 crore
- FY24: Revenue 241.84 crore; Net Profit 59.73 crore
For the first half of FY25, the company achieved a net profit of 24.20 crore on revenue of 98.51 crore. The company’s PAT margins and return on capital employed (ROCE) remain healthy, though ROCE has shown a gradual decline as the business expands.
Comparison with Peers
DWISL has identified VA Tech Wabag and EMS Ltd. as its listed peers, trading at P/E multiples of 36.9 and 27.3, respectively. Although they operate in related industries, they are not directly comparable to DWISL due to differences in business focus.
Merchant Banker’s Track Record
The Book Running Lead Manager (BRLM), SMC Capitals Ltd., has a solid track record, with no previous IPOs closing below the issue price on the listing day.
Conclusion
DWISL has positioned itself as a prominent player in the groundwater recharging sector, backed by consistent financial performance and a solid order book. With over 95% of its revenue coming from water management contracts, the company is poised to benefit from India’s focus on water conservation and infrastructure development.
For investors seeking opportunities in a growing niche market, DWISL’s IPO offers an attractive option for medium to long-term returns. However, it’s essential to consider the competitive landscape and perform due diligence before making an investment decision.