Denta Water and Infra Solutions Day 3: Check subscription status, GMP and more

The initial public offering (IPO) of Denta Water and Infra Solutions continued to attract a strong response from the investors during the third and final day of the bidding process. The issue was overall subscribed more than 17 times on day one and ended day two with nearly 51 times bidding.

The Denta Water and Infra Solutions is selling its shares in the price band of Rs 279-294 apiece. Investors can apply for a minimum of 50 shares and its multiples thereafter. The issue is entirely a fresh share sale of up to 75,00,000 equity shares amounting to Rs 220.50 crore.

According to the data, the investors made bids for 83,15,86,750 equity shares, or 158.40 times, compared to the 52,50,000 equity shares offered for the subscription by 2.25 pm on Thursday, January 09, 2025. The three-day bidding, which kicked off on Wednesday, January 22, shall conclude today.

The allocation for non-institutional investors (NIIs) was subscribed 413.16 times, while the portion reserved for retail investors saw a subscription of 76.68 times. However, the quota set aside for qualified institutional bidders (QIBs) was subscribed 110.33 times as of the same time.

Incorporated in 2016, Bengaluru-based Denta Water and Infra Solutions 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 grey market premium (GMP) of Denta Water and Infra Solutions has taken a hit firm amid the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 120-125 per share in the unofficial market, suggesting a listing pop of over 40-42 per cent for the investors. The GMP stood at Rs 165 before the issue opened for bidding.

Brokerages are mostly positive on the issue suggesting investors to subscribe to it citing its strong financial performance, recent order wins, rising demand for the water treatment solutions and reasonable valuations. However, dependence on government projects , joint ventures, political volatility and high competition are some major risks for the issue.

SBI Securities is valued at FY24 P/E and EV/EBITDA multiple of 13.1times /9.8 1times at post-issue capital of upper price band. The company’s revenue, Ebitda and PAT, achieved CAGR of 41.3 per cent, 23.6 per cent and 24.8 per cent to Rs 239 crore, Rs 79 crore and Rs 60 crore during FY22-FY24 period, respectively.

"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 per cent for the CY24E-CY30E period. We recommend the investors to subscribe to the issue," it said.

Quadrant Future Tek raised Rs 66.15 crore from 10 institutional investors via anchor book as it allocated 22.5 lakh equity shares at a price of Rs 294 apiece. For the six months ended on September 30, 2024, Denta Water and Infra Solutions reported a net loss of Rs 24.2 crore with a revenue of Rs 98.51 crore.

The company has reserved 50 per cent of the net issue for qualified institutional bidders (QIBs). Non-institutional investors (NIIs) will have 15 per cent of the net issue. Remaining 35 per cent of the net issue shall be issued to retail investors of the issue. It shall command a total market capitalization close to Rs 785 crore.

In India, the Water and Wastewater Treatment market is expected to grow at a CAGR of 6.2 per cent by 2033 led by CAGR of 6.24 per cent in southern India. The company derives over 87 per cent of its revenue from water management while the rest are derived from irrigation, Roads and Miscellaneous segments, said Indsec Research.

"Its asset light model for purchase of equipment helps it sustain healthy asset turnover and maintain decent profitability. Company attracts a healthy Ebitda margin of 33-43 per cent which is one of the highest in the industry. As is the case with EPC companies, the second half of the financial year is strong for these companies. We assign 'subscribe' rating to the IPO," it said.

SMC Capitals is the book running lead manager of the Denta Water IPO, while Integrated Registry Management Services is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with January 29, Wednesday as the tentative date of listing.