Denta Water and Infra IPO Day 2: Issue Subscribed 46x, Key Highlights and Updates

The initial public offering (IPO) of Denta Water and Infra Solutions Ltd, a prominent water and infrastructure solutions provider, has garnered immense investor interest. The subscription window, which opened on January 22, 2025, will close on January 24, 2025. Through this IPO, the company aims to raise ₹220.50 crore to bolster its water management projects and infrastructure services.

Day 2 Highlights:

Subscription Details:

By Day 2, the IPO had been oversubscribed 46 times, showcasing robust demand. On Day 1, it was already oversubscribed by 17.05 times. According to BSE data, bids were received for 8,95,10,100 shares compared to the 52,50,000 shares on offer.

Retail Investors: Subscribed 39.48x

Non-Institutional Investors (NII): Subscribed 109.54x

Qualified Institutional Buyers (QIB): Subscribed 4.41x

Price Band and Structure:

The IPO price band is set at ₹279-₹294 per share, comprising a fresh issuance of 75 lakh equity shares. The proceeds from the issue will be utilized as follows:

₹150 crore allocated for working capital requirements

Remaining funds for general corporate purposes

Key Strengths of Denta Water and Infra:

Expertise in groundwater recharging and water management projects.

Strong in-house design and engineering capabilities.

A robust order book and an efficient operational model.

Market Potential:

According to SMIFS Limited, the Indian water treatment market is projected to grow at a CAGR of 6.20%, reaching USD 23.85 billion by 2033. Denta’s stronghold in Karnataka and its expansion into other states like Gujarat, Maharashtra, and Uttar Pradesh places it in a favorable position to capitalize on these opportunities.

Financial Overview:

As of November 30, 2024:

Order Book: ₹11,004.36 million, with ₹10,667.52 million attributed to water projects.

Completed Projects: ₹3,479.85 million worth of work.

Ongoing Projects: 17 projects with a remaining order book of ₹7,524.51 million, expected to be executed within 24-36 months.

Industry Context:

India faces significant challenges in wastewater treatment, with only 28% of domestic sewage receiving treatment. With urbanization driving demand, Denta’s focus on innovative solutions and government-backed infrastructure projects makes it a crucial player in the sector.

Recommendations:

Several market experts, including Arihant Capital, have recommended subscribing to the IPO for long-term benefits, citing:

A strong order book (~3.2x FY24 revenue).

Strategic expertise in groundwater recharge and water reuse projects.

Attractive valuation metrics at an EV/EBITDA of 9.1x and a P/E ratio of 13.14x based on FY24 earnings.

Company Highlights:

Denta Water & Infra Solutions Ltd. is a leading EPC provider specializing in water and infrastructure projects. The company has undertaken several notable ventures, including the KC Valley Project Phase 1, Byrapura LIS Project, and Hiremagaluru LIS Project, solidifying its reputation in the sector.

Leadership Team:

The company is led by a diverse and experienced team, including:

Manish Shetty, Managing Director

Sujith T R, Whole-time Director and CFO (formerly with Johnson & Johnson)

Nista U Shetty, Non-Executive Director with expertise in wellness and hospitality

R. Narendra Babu, Independent Director with vast experience in water management and irrigation

Conclusion:

The Denta Water and Infra IPO has generated significant buzz, reflecting its strong market potential and investor confidence. With its established expertise, robust order book, and strategic market positioning, the company is poised for sustained growth in the water management and infrastructure sectors. Investors looking for long-term opportunities in these high-growth areas may find this IPO an attractive option.