Strong Debut! Denta Water and Infra Solutions shares list at ₹325 on NSE, up 10.5% from IPO price

Denta Water and Infra Solutions IPO listing: Denta Water and Infra Solutions shares made a strong debut on Wednesday, January 29, listing at ₹325 on NSE, a premium of 10.54 percent over the issue price of ₹294. Meanwhile, on BSE, it debuted at ₹330, up 12.24 percent from its IPO price.

Denta Water's initial public offering (IPO), valued at ₹220.50 crore, was open for subscription from January 22 to January 24. The IPO price band was fixed at ₹279-294 per equity share.

Following the three days of bidding, Denta Water IPO closed with exceptional demand, garnering 221.54 times bids. The IPO received bids for 116.31 crore shares against 52.5 lakh shares on offer. The retail investor segment was booked 90.38 times, while the non-institutional investors (NII) category was subscribed 507.07 times. Meanwhile, the Qualified Institutional Buyers quota was bid 236.94 times in the 3 days of bidding.

About the IPO

Denta Water IPO was entirely a fresh issue of 0.75 crore shares with no offer for sale component. Retail investors could apply with a minimum lot size of 50 shares, requiring a minimum investment of ₹14,700.

Nearly 50 percent of the issue was been reserved for qualified institutional bidders, while non-institutional investors had 15 percent of the allocation. Retail investors got the remaining 35 percent of the net issue.

Denta Water raised ₹66.15 crore from anchor investors ahead of the IPO on January 21, 2024.

The company intends to utilize the net proceeds from the issue to support its working capital requirements and for general corporate purposes, in accordance with applicable regulations.

Smc Capitals Limited is the book running lead manager of the Denta Water IPO, while Integrated Registry Management Services Private Limited is the registrar for the issue.

Review

Denta Water and Infra Solutions' IPO has garnered positive recommendations from brokerages, citing strong growth prospects in the water and wastewater treatment market.

SBI Securities: Subscribe

SBI Securities has recommended subscribing to the issue, highlighting the strong growth potential of the Indian water and wastewater treatment market, which is expected to expand at a CAGR of 6.2 percent from CY24E to CY30E. At the upper price band, Denta Water is valued at FY24 P/E and EV/EBITDA multiples of 13.1x and 9.8x, respectively. The company reported a robust financial performance during FY22-FY24, achieving a revenue CAGR of 41.3 percent, EBITDA CAGR of 23.6 percent, and PAT CAGR of 24.8 percent, with revenue, EBITDA, and PAT reaching ₹239 crore, ₹79 crore, and ₹60 crore, respectively.

Anand Rathi: Subscribe-Long Term

Anand Rathi has assigned a ‘Subscribe-Long Term’ rating, stating that the IPO is fairly priced. At the upper price band, the company is valued at a P/E of 13.14x and EV/EBITDA of 9.13x, with a market capitalization of ₹785 crore post-issue and a return on net worth of 36.36 percent. The brokerage noted that Denta Water and Infra Solutions has built strong expertise in water management projects, particularly in groundwater recharge. The company benefits from in-house capabilities in designing and engineering water infrastructure, a strong order book, and an efficient business model.

About the Company

Established in 2016, Denta Water and Infra Solutions Limited is an emerging player in the water and infrastructure sector, specializing in the design, installation, and commissioning of water management infrastructure projects, with a strong focus on groundwater recharge initiatives.

With expertise in water engineering and EPC services, the company undertakes large-scale infrastructure projects, including groundwater recharging through recycled water, catering to the increasing demand for sustainable water solutions. Denta Water and Infra Solutions has successfully executed key projects such as Byrapura, Hiremagaluru LIS, and KC Valley, playing a crucial role in Bengaluru’s wastewater management while supporting the government’s Jal Jeevan Mission.

As of November 30, 2024, the company has 17 ongoing projects to be implemented by them or under consortium. The company's share in the aggregate contract value comprises of ₹1,100.4 crore, out of which ₹1,066.7 crore is about water management projects.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.