Dinesh Engineers Limited IPO

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(i) Dinesh Engineers Limited was incorporated in 2006. Dinesh Engineers Limited is a passive communication infrastructure provider Company in India, focused on providing passive communication infrastructure services mainly to the Telecom operators and internet service providers (“ISPs”).

(ii) The Company is working towards executing the fibre laying work for many Telecom Operators. The company has been licensed by Department of Telecommunications (DoT) with the Infrastructure Provider (IP)-I License, under which they 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.

(iii) Their key expertise lies in the field of providing support services to telecom vendors which inter alia includes Project management for laying of the duct and Optic fibre cables, Construction of basic transmission and telecom utilities, Dark fiber leasing, Optical fiber network construction, Maintenance of duct and optic fibre and optical fibre project turnkey services to various Telecom network operators & broadband Service operators across the states of India.

(iv) They have created their own of fiber network of around 6000 km which runs across the state of Maharashtra, Goa, Telangana, Rajasthan, and Karnataka. The wired network infrastructure solutions are used by many Telecom Companies such as Airtel, BSNL, Reliance Jio, Vodafone, Idea, Tata Communication etc.which helps them inter-alia in increasing network’s bandwidth, maximize existing network capacity, improve network performance and availability.

(v) Some of the prominent clients of their Company include telecom giants like Bharti Airtel Ltd, Idea Cellular, Vodafone, Tata Communications Ltd. etc. as well as ISP clients like Intech, D-vois SSV, Atria, power grid, Hathway, Sify riding on their fibre-optic network along with several routes. Apart from the above we also have Mahanagar Gas Limited in our client list for gas pipeline work.

(vi) Management Interaction by Bloomberg Quint

Objects of the Dinesh Engineers Limited IPO:

Objective of Dinesh Engineers Limited IPO are: 1. Expansion of business by setting up of further OFC Network under IP-1 License 2. To fund expenditures towards general corporate purposes 3. To meet public issue expenses

Dinesh Engineers Limited IPO Details:

Open Date: Sep 28 2018
Close Date: Oct 03 2018
Total Shares: 1,00,00,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 185 Cr.
Lot Size: 80 Shares
Issue Price: ₹ 183-185 Per Equity Share
Listing At: NSE,BSE
Listing Date: Oct 12 2018

Promoters And Management:

Promoters of Dinesh Engineers Limited Company are: Mr. Dinesh Kollaiah Kargal, aged 53 years is one of the Promoter and Managing Director of our Company. He has been on the Board of Directors of our Company since its incorporation. He has approximately 27 years of experience in the Telecom Infrastructure industry. He has completed his secondary education from Karnataka Secondary Education Board and holds a Diploma in Civil Engineering (General) from Sanjay Memorial Polytechnic, Sagar. He was a partner in a partnership firm, Dinesh Associates which was involved in the business of cable laying work & cable ducting and other rehabilitation work undertaking government and semi-government contracts since 1991 which was subsequently dissolved. In the year 2000, he started his proprietary concern in the name and style of Dinesh Associates. He is experienced in directing the Company’s overall business operation. He has been the recipient of Engineer of the Year Award, 2017 from Jain Engineers’ Society, Navi Mumbai Chapter. Mrs. Shashikala Dinesh Kargal, aged 47 years, is one of the Promoters and Whole-time Director of our Company. She has been on the Board of Directors of our Company since its incorporation. She has completed her secondary education from Karnataka Secondary Education Board. She has approximately 23 years of experience in the Telecom Infrastructure industry. She was a partner in a partnership firm, Dinesh Associates since 1995 which was inter-alia involved in the Telecom Infrastructure industry and which was subsequently dissolved. She was a Sole Proprietor of DA Enterprise since August 03, 2004 which was involved in Business Auxiliary Services for TTML.

Capital Structure:

(i) Authorized Share Capital 40,000,000  shares at FV@10) 40 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (29,500,000  Shares at FV@10) 29.5 Cr
(iii) Present Issue to public (  10,000,000   Shares at FV@10) 10 Cr
(iv) Reservation for QIB  (500000 Shares at FV@10) 50%
(v) Reservation for HNI  (1500000 hares at FV@10) 15%
(vi) Reservation for Retail  (3500000 Shares at FV@10) 35%
(vii) Paid Up Share Capital after the issue 39.5 Cr

Financials of Dinesh Engineers Limited IPO:

Year Revenue(M) PAT(M) EBITDA Margins Profit Margins Outstanding Shares( M) EPS
FY16 1225.02 128.98 23.0% 11% 0.25 516
FY17 1699.11 219.82 24.0% 13% 0.25 879
FY18 3027.78 618.01 35.0% 20% 29.5 21

Comparison With Peers:

As per RHP, none of the listed companies in India are engaged is a portfolio of business similar to the company.

Recommendation on Dinesh Engineers Limited IPO:

Review and Recommendation of Dinesh Engineers Limited IPO from IZ team is: 5/10 [ The company has shown excellent growth in the last 3 years and the valuation of the issue is also reasonable. Listing gains expected. However, as the company mainly caters to Telecom Sector which is reeling under pressure is problematic going forward if condition won't improve.]

Lead Manager of Dinesh Engineers Limited IPO:

  1. Hem Securities Limited

Registrar of Dinesh Engineers Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Dinesh Engineers Limited DEPL House Neighbourhood Shopping Complex, Sector-4, Nerul, Navi Mumbai -400706, Maharashtra, India. Phone No. + 91-022-27704600/4700 E-mail: admn@depl.co.in Website: www.depl.co.in

Bid Details of Dinesh Engineers Limited IPO as on
03-Oct-2018 17:00:00 IST

No.of shares offered No. of shares bid No. of total times
5,000,000 0 -
1,500,000 642,800 0.43
3,500,000 1,008,800 0.29
- - -
- - -
10,000,000 1,651,600 0.17
No.of shares offered No. of shares bid No. of total times
5,000,000 - -
1,500,000 147,520 0.10
3,500,000 701,680 0.20
- - -
- - -
10,000,000 849,200 0.08
No.of shares offered No. of shares bid No. of total times
5,000,000 - -
1,500,000 495,280 0.33
3,500,000 307,120 0.09
- - -
- - -
10,000,000 802,400 0.08

Discussion on Dinesh Engineers Limited IPO:

    *Main board IPO Update*

    First main board IPO expected to hit equity markets is Chalet Hotels.

    It is expected to come in last week of this month.

    New investment terminology

    BSE : Bombay Se Exit
    NSE : Nation Se Exit
    F/O : Future Over
    NIFTY : No Income For This Year
    PE : Plunge Endless
    EBITDA : Exit Before It Tumbles Down Again
    HNI : Has No Idea
    PMS : Pre-Meditated Scam

    The winner of all …

    SIP : Suicide by Investing Patiently.

    *Dinesh Engineers Ltd*
    IPO cancellation confirmed by Hem security

    It provide services to telecom company. There is sterlite technology which has much better operation and this company has little chance to give any competition. This market is not for primary at all as not even a single company has given much listing gain. No harm in giving it a miss. In such market look at stock post listing to check the performance . Recent listing IRCOn well subscribed is available at discount as well

      I agree with Tarun Bhai.. avoid this because of current market conditions..

      Global Market and Indian Market ki condition achi Nahin Hai. IPO generally give good returns when market condition is favorable. Jab Secondary market main tested companies discount pe mil rahi hai toh IPO main kaun risk lega. Better to avoid IPOs in this market.

    Going by the valuation it is asking a P/E of 11.82x on FY18 earnings. There are no peers to compare with to exactly come with the valuation metric. Prima facie valuations look cheap. However, just wait for the grey market activity to start, then only anything can be firmly concluded.

    Any idea regarding Grey Market of Dinesh Engineers? What could be expecting listing gains in Dinesh Engineers?

    I think this company work in Fiber Optics Network not in 2g/3g/4g network and in India Broadband & Fiber Network is increased day by day.

    I am not shocked if this share list at double the price of issue like ASTRON

      All the Villages are getting connected with Fiber through Bharat Net project. I don’t think so Dinesh Engineers are connected anyway to this. Plus they lease their fiber to SIFY Broadband and with Reliance coming up with fiber broadband the competition will be intense. How SIFY and other Broadband operators survive will have to see.

    Some Major Risk in the Business of Dinesh Engineers Limited:

    1. The Company mainly caters to Telecom Sector and their main clients are Airtel, Vodafone-Idea, BSNL, Reliance JIO. The Telecom sector is going through a tough time due to price war started by Reliance JIO. The Revenue of all the telecom companies has plummeted heavily in the last 1 year. Going forward how many telecom companies service is a big question. We have already seen the consequences when Vodafone and Idea got merged.

    2. As of Fiscal Years 2016, 2017 and 2018, the average debtor cycle was approximately 92 days,
    123 days and 107 days, respectively. As at March 31, 2017, and March 31, 2018, the trade receivables amounted to ₹ 56 Cr and ₹ 88 Cr, representing 33.66% and 29.15% of the gross consolidated revenue from operations for the respective periods. The high debtor days itself speaks about the condition of the Telecom market.

    3. The contingent liabilities as at March 31, 2018, amounted to ₹ 37.421 Cr towards Guarantees & LC excluding financial guarantees. If any of these contingent liabilities materializes, our results of operations and financial condition may be adversely affected.

    Complete Analysis of Financials of the Dinesh Engineers Limited

    A) Performance Analysis of the last 3 years

    1. Clocked Revenue Growth of 57.19% in last 3 years.
    2. Clocked PAT Growth of 119.12% in last 3 years.
    3. The Company has excellent margins of above 23% in last 3 years.
    4. ROE= 44%(2016), 47%( 2017) and 57%(2018). However, due post issue the ROE will stand at 21%.

    Conclusion: The Company has shown excellent growth in the last 3 years in terms of Revenire, PAT, and EBITDA. Moreover, the company has good ROE as well.

    B) D/E based on FY18 Financials

    1. Debt= 26 Cr
    2. Equity = 107
    3. D/E=0.24

    Conclusion: The Company is almost debt free.

    C) Valuation of the company(P/E and EV/EBITDA)

    1. PAT= 61.8 Cr
    2. Outstanding Shares(post Issue) =3.95 Cr
    3. P/E= 11.82
    4. EV= 730 Cr(M.cap)+26 Cr(debt)-.587 Cr(Cash)=755 Cr
    5. EBITDA= 105.9 Cr
    6. EV/EBITDA= 7.12

    Conclusion: The valuation looks quite reasonable. As per RHP, the company does not have any peer to compare with.

    The company core business is of leasing the fibre and duct on IRU basis to telecom operators such as Airtel, Idea, Vodafone, Tata Telecommunication. In telecommunications, Indefeasible Right of Use (IRU) is the effective long-term lease (temporary ownership) of a portion of the capacity of an international cable. IRUs are specified in terms of a certain number of channels of a given bandwidth. IRU is granted by the company or consortium of companies that built the (usually optical fiber) cable.

      Let me finish with the reading of DRHP. So many days are left for the opening of the IPO. The recommendation will follow soon.

    *Dinesh Engineers IPO*

    Issue Opens: 28 Sept.
    Issue Close: 03 Oct.
    Price Band :183/-to 185/-
    Bid Lot : 80 Shares
    App.Amount: 14800/-
    Issue Size : 183 to 185 Crore
    Listing : ‘T’ Group, NSE & BSE

    Financial Snapshot
    a) Revenue————————122 Cr————————169 Cr————————-302 Cr( Growth= 57%)
    b) PAT—————————–12 Cr————————-21 Cr—————————61 Cr( Growth= 125%)
    c) EBITDA————————–27 Cr————————-45 Cr—————————107 Cr( Growth= 99%))

    The company caters to Telecom vide which 98% of the business is coming for the company. The present condition of the Telecom is quite bad in India. Many companies like Reliance Communication, Aircel etc have shut down their operations and companies like Vodafone and Idea got merged. So we need to be careful in this IPO. The more updates and recommendation will come once I read DRHP.

    Basis Of Allotment: 09-Oct-18
    Refund Initiate 10-Oct-18
    Credit Shares to Demat : 10-Oct-18
    Listing At: NSE,BSE
    Listing Date: 12-Oct-18

    Listing May be in T Group