Denta Water IPO allotment is expected to be finalised on January 27, while the company will list on BSE and NSE with tentative listing date fixed as January 29, 2025
The initial public offering (IPO) of Denta Water and Infra Solutions opened for subscription today, January 22. The IPO is completely a fresh issue of 75 lakh equity shares worth Rs 220 crore. Ahead of the IPO, Denta Water raised slightly over Rs 66 crore from anchor investors.
Among the participants in the anchor round were both foreign and domestic institutions, including 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, according to the circular posted on the BSE’s website.
The company allocated 22.5 lakh equity shares at a price of Rs 294 each to 10 funds, resulting in total transaction value of Rs 66.15 crore.
The company has fixed the price band of its shares at Rs 279-297 per share. The IPO will close for bidding on January 24.
Denta Water has reserved nearly 50% of the issue for qualified institutional bidders, while non-institutional investors will have 15% of the allocation. Retail investors will get the remaining 35% of the net issue.
The allotment for the Denta Water IPO is expected to be finalised on January 27. The company will list on BSE and NSE with tentative listing date fixed as January 29, 2025.
SMC Capitals Limited is the book-running lead manager of the Denta Water IPO, while Integrated Registry Management Services Private Limited is the registrar.
The company proposes to utilize the net proceeds to meet the working capital requirements of the company and general corporate purposes, subject to the applicable laws.
Denta Water IPO was commanding a grey market premium (GMP) of Rs 165 as of January 22, 2025, at 07:02 AM. With the price band set at Rs 294, the estimated listing price for the IPO is Rs 459, indicating a potential gain of 56.12% per share, according to Investorgain.com.
Analysts at Anand Rathi Research recommended a "Subscribe-Long term" rating for the IPO, highlighting its fair pricing, strong order book, and efficient business model.
“At the upper price band company is valuing at P/E of 13.14x, with an EV/EBITDA of 9.13x and market cap of Rs 7,849 million post issue of equity shares and return on net worth of 36.36%,” said Anand Rathi.
The brokerage wrote in its note that Denta Water and Infra Solutions has established expertise in water management projects with a special focus on groundwater recharging with expertise in in-house designing and engineering of water management infrastructure projects.
According to analysts at SBI Securities, 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% for the CY24E-CY30E period.
“The company is valued at FY24 P/E and EV/EBITDA multiple of 13.1x/9.8 at post-issue capital of upper price band. The company’s Revenue/EBITDA/PAT achieved CAGR of 41.3%/23.6%/24.8% to Rs 239 cr/Rs 79 cr/Rs 60 cr during FY22-FY24 period,” the brokerage said in its research note.
“We recommend the investors to subscribe the issue,” it said.
Denta Water and Infra Solutions Ltd has an order book of Rs 7,524.5 million, approximately 3.2 times its expected revenue for FY24, indicating strong business visibility in the medium term. The company plans to utilize Rs 150 crore, or around 68% of the IPO proceeds, for working capital.
Denta Water has significant expertise in groundwater recharge projects and is focused on expanding its infrastructure development business and exploring new regions for water reuse, analysts at Arihant Capital said.
“At the upper band of Rs 294, the issue is valued at an EV/EBITDA of 9.1x based on FY24 EBITDA and P/E of 13.14x, based on FY24 EPS of INR 22.37. We assign a “Subscribe for Long Term” rating for this issue,” the brokerage said.
Incorporated in 2016, Denta Water and Infra Solutions Limited is a growing water and infrastructure solutions company engaged in designing, installing, and commissioning water management infrastructure projects with expertise in groundwater recharge projects. The company has experience in water engineering and EPC services, the company specializes in infrastructure projects, including groundwater recharging through recycled water, addressing growing water solution demands.
Bangalore-based company has successfully executed major projects like Byrapura, Hiremagaluru LIS, and KC Valley, contributing to Bengaluru's wastewater management and supporting the Government's Jal Jeevan Mission. The company owns 98 acres of land in Madikeri, Karnataka, producing coffee, pepper, and cardamom. Additionally, it has a beach resort in Udupi, generating revenue through a facility management agreement.
(Disclaimer: The views expressed by the spokespersons in this article are their own and do not constitute financial advice.)