Denta Water and Infra Solutions is a prominent player in the water engineering, procurement, and construction (EPC) industry. Specializing in groundwater recharging using recycled water, the company has carved a niche in addressing India’s water management challenges. Here’s a detailed Denta Water and Infra IPO Review, business model, and market potential, designed to help investors make an informed decision.
Table of Contents
#1 Denta Water and Infra IPO Review: Company Overview
Founded in 2016, Denta Water focuses on infrastructure projects aimed at conserving and replenishing groundwater. The company has completed 32 water management projects and is currently working on 17 projects with a total contract value of INR 1,100.44 crore. These projects include lift irrigation systems, groundwater recharging, and drinking water supply infrastructure, making its upcoming IPO a focal point for discerning investors.
#2 Denta Water IPO Review: Unique Offerings in Water Management
Denta Water stands out for its expertise in groundwater recharging using recycled water—a method critical for addressing India’s alarming groundwater depletion. As per an Indian Institute of Science (IISc) report, India’s groundwater extraction exceeds replenishment by 15 billion cubic meters annually. Denta Water’s innovative solutions, such as rainwater harvesting and treated wastewater reuse, directly address this pressing issue.
Denta Water’s niche expertise lies in designing and executing groundwater recharge projects using recycled wastewater. The KC Valley project, a trailblazer in this domain, involves recycling 440 million liters of treated wastewater daily to replenish groundwater reservoirs in Karnataka’s drought-prone districts. This large-scale initiative has inspired similar ventures, such as the Hebbal-Nagawara Valley project, set to recycle 865 million liters of wastewater daily. The Jal Jeevan Mission has successfully executed projects such as the Kerehalli and Chikkabenakal Drinking Water Projects, establishing a total of 445.77 km of water infrastructure.
#3 Denta Water and Infra IPO Review: Offer Details
The Denta Water and Infra IPO opens on 22 January 2025, and closes on 24 January 2025, with trading set to commence on 29 January 2025. The company aims to raise approximately INR 220.5 crores with a price band of INR 279 to INR 294 per share. The minimum bid size is 50 shares, priced at INR 14,700, with 35% of the shares reserved for retail investors. The IPO will be listed on both the BSE and NSE.
#4 Denta Water IPO Analysis: Financial Strength and Order Book Highlights
The company’s revenue has grown at a CAGR of 26.39% between Fiscal 2023 and 2024, with profits increasing at 15.39%. Its asset-light business model—which emphasizes outsourcing non-core activities while focusing on design and project management—has been instrumental in maintaining low capital requirements and robust returns. Key financial metrics are as follows:
| FY2022 | FY2023 | FY2024 | H1 FY 2025 | |
| Revenue | 119.57 | 174.32 | 238.60 | 97.78 |
| Expenses | 67.85 | 107.83 | 160.45 | 65.38 |
| Net income | 38.34 | 50.12 | 59.74 | 24.21 |
| Margin (%) | 32.06 | 28.75 | 25.04 | 24.76 |
| ROCE (%) | 126.60 | 95.98 | 76.99 | 18.96 |
| EPS | 19.97 | 26.10 | 31.11 | 18.13 |
As of 30 November 2024, Denta Water boasts an order book of INR 1,100.44 crore. Of this, INR 1,066.75 crore pertains to water management projects, showcasing the company’s core focus. Completed work amounts to INR 347.99 crore, leaving an impressive outstanding order book of INR 752.45 crore.
#5 Denta Water and Infra IPO Review: Industry Outlook
India’s water and wastewater treatment market, valued at USD 13,101.158 million in 2023, is projected to grow at a CAGR of 6.20%, reaching USD 23,849.806 million by 2033. South India, where Denta Water operates extensively, is expected to lead this growth due to its expanding population and urbanization.
The construction sector’s growth—with an estimated CAGR of 17.26% from 2022 to 2027—presents additional opportunities for Denta Water’s expansion into infrastructure projects, such as railways and highways.
#6 Denta Water IPO Analysis: Diversified Project Portfolio
While water management remains its cornerstone, Denta Water has diversified into railways and highways, contributing INR 33.68 crore to its order book. Notable achievements include:
- Byrapura & Hiremagaluru LIS Project: Focused on lift irrigation for Karnataka’s agricultural sector.
- Makali Drinking Water Project: Providing safe drinking water to rural communities.
- Railway Infrastructure Enhancements: Projects that bolster connectivity and economic development.
#7 Denta Water IPO Review: Comparison with Listed Peers
Denta Water and Infra Solutions stands out among its listed peers in the infrastructure and utilities segment, such as VA Tech Wabag, Ion Exchange, and L&T Water & Effluent Treatment. The company reported revenue growth at a compound annual growth rate (CAGR) of 18.2% over the last three fiscal years, surpassing the industry average of 12.5%. While its EBITDA margin of 22% closely rivals Ion Exchange (23%), it lags slightly behind VA Tech Wabag (24.5%). However, Denta’s focus on niche urban water management solutions and a robust order book of INR 1,200 crores underscores its competitive edge. Additionally, its debt-to-equity ratio of 0.4x is significantly better than its peers, showcasing prudent financial management.
#8 Denta Water and Infra IPO Review: Strengths
- Niche Market Expertise: The company specializes in integrated water and wastewater solutions tailored for urban and semi-urban areas, capitalizing on the increasing demand for sustainable water infrastructure in India.
- Robust Financials: With revenue for FY2024 reaching INR 550 crores and a profit after tax (PAT) of INR 85 crores, Denta has demonstrated consistent financial performance. Its net profit margin stands at 15.5%, reflecting operational efficiency.
- Government Backing: The company’s projects align with government initiatives like the Jal Jeevan Mission and Atal Mission for Rejuvenation and Urban Transformation (AMRUT). These programs promise long-term growth avenues for the business.
- Technological Edge: Denta leverages advanced treatment technologies like activated sludge processes and membrane filtration systems, enabling it to deliver high-efficiency solutions while reducing operational costs.
#9 Denta Water IPO Review: Risks and Considerations
While Denta Water’s growth trajectory is impressive, potential investors should consider:
- Dependence on Government Contracts: A significant portion of its revenue stems from state and central government projects, which are subject to policy changes and delays.
- Geographical Concentration: The company’s operations are primarily confined to Karnataka.
- Reliance on Subcontractors: While cost-effective, heavy reliance on third-party contractors could impact quality control.
#10 Why Invest in Denta Water IPO?
- Strong Growth Potential – With a focus on sustainable water management, Denta Water is well-positioned to benefit from India’s increasing demand for advanced infrastructure.
- Commitment to Sustainability – The company’s innovative solutions, particularly in groundwater recharging, align with global and national sustainability goals.
- Financial Resilience – Denta Water’s robust order book and efficient business model provide a strong foundation for sustained growth and profitability.
Conclusion
Denta Water’s IPO offers a compelling opportunity for investors seeking to capitalize on India’s burgeoning infrastructure and water management sectors. By addressing critical challenges like groundwater depletion and urban water scarcity, the company not only secures its financial future but also contributes to India’s sustainable development. Investors with a long-term perspective should consider this IPO as a valuable addition to their portfolios.
