Dinesh Engineers Limited IPO Details, Analysis, Subscription & Discussion

Dinesh Engineers IPO Issue Details:

IPO date:                  28 Sep – 03 Oct 2019
Issue Size:                185 Cr
Offer Price:              Rs 183 – Rs 185 Per Equity Share
Market Lot:              80 Shares & multiples
Exchange Listing:   BSE, NSE

IPO Timelines (tentative dates):

Allotment & refund:    09 Oct
Credit to Demat:           10 Oct
Listing on Exchange:

Company Promoters:  Mr Dinesh Kargal, Mrs Shashikala Kargal

Objective of the Issue: a Fresh issue for setting up of Optical Fiber Cable (OFC) network under IP-1 License

IPO Registrar: Link Intime India Private Ltd

Company Overview

Incorporated in 2006, Dinesh Engineers Limited is a telecom infrastructure provider company, focused on laying duct and optic fibre cables for telecommunication companies and internet service providers in India along with operation and maintenance of such cables. Also, the gas pipeline laying work will help the company to diversify in the field of the gas sector which opened new business avenues for the company.

The company has been licensed by Department of Telecommunications (DoT) with the infrastructure Provider (IP)-I License, under which the company can establish and maintain wired networks, Duct space for the purpose to grant on lease or sale on IRU basis to the licensees of Telecom operators, ISPs etc

Business operations:

Dinesh Engineers Operation
1. Project Execution for Telecom operators (Vendor Projects)
2. Laying fiber under Infrastructure Provider (IP)-I License (IP-I)
3. Operations & Maintenance (O&M)

Client Base:
Airtel, BSNL, Reliance Jio, Vodafone, Idea, Tata Communication, Mahanagar Gas, power grid, Hathway, Sify etc

Completion:
– The company has laid fibre network of around 9500 Km for the telecom operators under the Vendor projects which run across various states.
– The company has created own optic fibre network of around 7500 km which runs across the various states under IP-I license.

The company website: http://www.depl.co.in/

Dinesh Engineers IPO Analysis

Financial Performance:

dinesh-engineers-ipo-financials

Company category:  Fast grower

Company Strength:

  • Company’s Order Book is approximately 420 Cr with experienced promoters, management team and skilled workforce.
  • Long-standing customer relationships with strong repeat business with all top telecom companies.
  • Fresh issue proceeding will be used for expansion of OFC network which will generate more revenue.
  • Optical Fiber Cable (OFC) continues to be the backbone of the digital world as continuous need for high-speed connectivity and increasing demand for internet
  • The multifold growth of the company financially as well as business perspective in past. The trend may continue further.
  • An efficient business model which has facilitated in maximizing efficiency and increasing profit margins with better control over the execution and timely completion of projects.
  • The telecom operators are more focused on taking the fibre network on lease rather than developing and maintaining their own network which is a business opportunity for the company.
  • An advantage over competitors, as the company has own team of sub-contractors.
  • The telecom sector has witnessed exponential growth (19.6 per cent CAGR in terms of subscriber base and at 7.07 per cent CAGR from a revenue) over the last few years
  • The government of India Initiative ‘Digital India‘ and ‘BharatNet‘ would boost the business. The government has also proposed a subsidy of Rs.3,600 crore to private telcos.

Company Risks:

  • A significant portion of revenue is generated from the limited number of large customers
  • Highly competitive market from un-organized sector
  • Any delay in the collection of dues and receivables from customers may have an adverse effect
  • Telecom industry is very dynamic and changes occur drastically.

Peer Comparison:

No direct peer listed on Stock Market

Analysis Conclusion

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Superior multifold financial growth, strong order book, the continuous hunger of expansion plan from the fresh issue, strong repeated business from clients, higher profit margin and MOREOVER very reasonable intrinsic valuation of Price to Earnings (P/E) of just 12 makes this HOT IPO for REAL GAIN. But looking at current downward market sentiment, I recommend APPLY for medium-term gain (few months to 2 years).

Dinesh Engineers IPO subscription status

IMP NOTE: Withdrawal of IPO by Dinesh Engineers Limited due to current volatility in the capital market & poor subscription figure.

Abbreviations

EPS – Earning per share
P/E – Price to Earning
RoE – Return on Equity
QIB – Qualified Institutional Buyer
NII – Non-Institutional Investors
RII – Retail Individual Investor
OFC – Optical Fiber Cable
IP – Infrastructure Provider

3 comments

  1. There is no Grey Market movement for Dinesh Engieers IPO as of now till 26th Sep but still i am bullish on this IPO looking at small fresh issue at reasonable price and strong fundamentals.

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  2. Looking at 2 days poor subscription and downward market sentiment, Dinesh Engineers IPO may or may not give the listing gain even though all other factors are in favor of investors. So my view is little bit changed from Listing gain to medium term gain (few months to 2 years).

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  3. Withdrawal of IPO by Dinesh Engineers Limited : The company has decided to withdraw the application made for IPO on BSE & NSE platform due to current volatility in the capital market & poor subscription figure. The entire application money will be refunded.

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