Denta Water IPO: Check issue size, price band, and business model ahead of January 22 launch

Denta Water and Infra Solutions will launch its initial public offer on January 22 to raise ₹220.5 crore from the primary market.

The mainboard IPO comprises only a fresh issue of 75 lakh shares without any offer-for-sale (OFS) component. The public offer will close for bidding on January 24.

The company has fixed the IPO price band at ₹279-294 per share. For retail investors, the lot size is 50 shares, requiring a minimum investment of ₹14,700.

The IPO listing date has been tentatively fixed as January 29. Shares of Denta Water and Infra Solutions will be listed on the NSE and BSE.

Business model

Denta Water and Infra Solutions Ltd, commonly known as Denta Water, is a seasoned player in the water engineering, procurement, and construction (EPC) services segment.

Its core services include water infrastructure management and groundwater recharge projects. The company implements comprehensive solutions for water infrastructure management in various settings.

It also undertakes groundwater recharging projects involving innovative strategies to recharge aquifers to ensure long-term water sustainability.

Denta Water also undertakes construction projects in the railways and highways sectors and the operations and maintenance of water management infrastructure projects.

As of October 31, 2023, it had completed 27 projects related to water management infrastructure development. The company had executed projects worth ₹7.54 crore pertaining to railway infrastructure and roads and bridges construction.

Key competitors

Denta Water and Infra Solutions face competition from existing players due to the highly competitive tender-driven nature of the industry. Most infrastructure companies are present in various construction segments in the sector. Companies focused on water management and irrigation projects, such as Va Tech Wabag Ltd and EMS Ltd, are its direct competitors.

Key Financials

Ratios and key performance metric

Denta Water and Infra Solutions: Key strengths

• The company has established expertise in water management projects, with a special focus on groundwater recharging (GWR). It is now able to procure direct contracts as well as subcontracts from successful bidders.
• The company has in-house expertise in designing and engineering of water management infrastructure projects.
• Denta Water has an order book of 22 ongoing projects worth ₹984.22 crore, out of which ₹976.68 crore is related to water management projects.

Key weaknesses

• The company relies substantially on government clients for revenues as 69.68% of its order book as of October 31, 2023, is contributed by government clients.
• Its operations are geographically in one state, Karnataka, and any localised social unrest, natural calamities, or other similar incidents could have a material adverse effect on its business and financial operations.
• The company’s failure to successfully implement its expansion plan to North India and other parts of South India could adversely affect its business and results of operation.
• It faces competitive pressures from existing competitors and new entrants in both the public and private sectors.
• There is outstanding litigation against the company’s Promoter, Sowbhagyamma. Any adverse decision in such proceedings may render the company liable and may adversely affect the company’s business, results of operations, and financial condition.