With a fresh issue worth ₹220.50 crore, Denta Water and Infra Solutions Limited is set to launch its IPO from January 22 to January 24, 2025. But should you invest? Let’s break it down with key insights into the company’s business, financials, and IPO details.
About Denta Water and Infra Solutions Limited
Denta Water and Infra Solutions Limited, incorporated in 2016, is a water management and infrastructure solutions company specialising in designing, installing, and commissioning groundwater recharge projects. The company has executed several large-scale projects, including Byrapura, Hiremagaluru LIS, and KC Valley, contributing to wastewater management in Bengaluru.
Apart from its core business, Denta Water also owns 98 acres of land in Madikeri, Karnataka, where it grows coffee, pepper, and cardamom, and a beach resort in Udupi generating revenue through a facility management agreement.
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Why is the company launching an IPO?
The IPO aims to raise funds for:
- Meeting working capital requirements
- General corporate purposes
The entire issue is a fresh issue of 75 lakh shares, meaning no existing shareholders are selling their stake.
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Denta Water’s financial performance
A look at the company’s financial growth shows a consistent increase in revenue and profits over the years.
| Financial Year | Revenue (₹ Cr) | Profit After Tax (₹ Cr) | Net Worth (₹ Cr) |
| 2022 | 119.64 | 38.34 | 54.43 |
| 2023 | 175.75 | 50.11 | 104.55 |
| 2024 | 241.84 | 60 | 164.26 |
| H1 FY25 | 98.51 | 24.2 | 188.46 |
Key financial metrics
| Metric | Value |
| Market Cap (₹ Cr) | 784.98 |
| Return on Equity (ROE) | 36.36% |
| Return on Capital Employed (ROCE) | 76.99% |
| Debt/Equity Ratio | 0.01 |
| Price-to-Earnings Ratio (P/E) | 16.22 (Post-IPO) |
| Price-to-Book Value (P/B) | 5.01 |
| PAT Margin | 25.03% |
Denta Water IPO details
| IPO Date | January 22, 2025 – January 24, 2025 |
| Listing Date (Tentative) | January 29, 2025 |
| Face Value | ₹10 per share |
| Price Band | ₹279 – ₹294 per share |
| Lot Size | 50 shares |
| Total Issue Size | 75,00,000 shares (₹220.50 Cr) |
| Fresh Issue | 75,00,000 shares (₹220.50 Cr) |
| Listing Exchange | BSE, NSE |
| Lead Manager | SMC Capitals Limited |
| Registrar | Integrated Registry Management Services Pvt Ltd |
How will the IPO funds be used?
| Utilisation | Amount (₹ Cr) |
| Working capital | 150 |
| General corporate purposes | Remaining amount |
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Why should you consider investing in Denta Water IPO?
Advantages
- Strong financials: Consistently growing revenue and profits.
- Niche market leader: Specialised in water infrastructure and groundwater recharge projects.
- Government-backed projects: Plays a crucial role in India’s water sustainability goals.
- Strong order book: ₹9,842.26 crore worth of projects as of October 31, 2024.
- High ROE and ROCE: Attractive returns compared to industry peers.
Risks to watch out for
- GMP concerns: Grey Market Premium (GMP) is currently low, indicating limited initial demand.
- Sector dependency: Business relies heavily on infrastructure and government contracts.
- Competitive landscape: Faces competition from larger players in water infrastructure.
Bottom line
Denta Water and Infra Solutions IPO presents an opportunity for investors looking for exposure to India’s water management and infrastructure sector. With strong financials and government-backed projects, it has the potential for long-term growth. However, cautious investors should keep an eye on GMP trends and sector-related risks before making a decision.
If you’re looking for an IPO with solid financials and a niche focus, Denta Water could be worth considering for a long-term hold.
