Dinesh Engineers IPO Review

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Dinesh Engineers IPO

7.6

Company Background

7.5/10

Price Band

7.0/10

Financial Health

8.5/10

Industry Situation

7.5/10

IPO Proceeds Usage

7.5/10

Pros

  • Strong & Consistent Financials
  • Widespread Fibre Network
  • Modern Tech Usage

Cons

  • Big Fluctuations Risk
  • Competitive Market

Dinesh Engineers Limited Basic Details

 

Dinesh Engineers Limited Background

The company was originally incorporated on February 7, 2006, at Mumbai in the state of Maharashtra. It is a passive communication infrastructure provider which focuses its services to Telecom operators and internet service providers.

The company has obtained Infrastructure  Provider (IP) – I License from the Department of Telecommunications. The company has an optic fibre network of around 6000 km covering Maharashtra, Goa, Telangana, Rajasthan and Karnataka.

Their solutions are used by huge telecom companies like Airtel, BSNL, Reliance Jio, Vodafone, Idea, etc. which help them to increase the bandwidth of their network, in increasing the capacity of their network and in improving the performance of the network.

The company enjoys a strong clientele network which consists of telecom clients such as Bharti Airtel, Idea, Vodafone, Tata Communications, etc. and ISP clients such as Intech, D-vois SSV, Atria, etc. The company is ISO 9001, 14001 & OHSAS 18001 certified.

The business is coming up with an IPO (Initial Public Offering) in the next few days and in this detailed Dinesh Engineers IPO Review, we will be highlighting some of the crucial facts and information pieces you would want to know.

Based on the info provided, you’d most likely be able to take a call on whether to go ahead with this IPO investment or not.

Dinesh Engineers IPO Data Points

Dinesh Engineers IPO will open on September 28, 2018, and close for subscription on October 3, 2018. The IPO size will be of 10,000,000 Equity shares and the face value of each share will be ₹10. The price band has been set at ₹183 – ₹185 per equity share.

The offer price includes a premium of ₹173 – ₹175 and is 18.3 – 18.5 times the face value of the equity shares.

The IPO size is expected to be up to ₹185 crores. 35% of the issue will be available for allocation to retail investors. The market lot size is of 80 equity shares and the shares will be listed on the SME exchange of the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Pursuant to a resolution passed on February 21, 2018, the fresh issue has been authorised by the Board of Directors and pursuant to the special resolution of the shareholders at the Extraordinary General Meeting held on March 19, 2018, the offer has been approved by them.

Dinesh Engineers Limited Financial Performance

The revenues of the company have been increasing consistently over the last few years. The total income has increased significantly from ₹239.50 million in fiscal 2014 to ₹2001.06 million in the period ended December 31, 2017.

 

The same trend has been reflected in Profit after tax of the company where PAT has increased from ₹30.47 million in the financial year ended March 31, 2014, to ₹307.40 million in the period ended December 31, 2017.

As per the restated standalone financials, the return on net worth of the company for the years ended March 31, 2017, March 31, 2016, and March 31, 2015, is 47.8%, 43.92% and 35.19% respectively and for period ended December 31, 2017 (not annualised) is 40.11%.

Dinesh Engineers IPO Objectives

The main objectives of the Dinesh Engineers IPO are as follows:

  • For expanding the existing business through establishing further OFC network under IP -1 License
  • For meeting expenses related to the general corporate operations.
  • For meeting expenses related to the IPO.

Other than the above-mentioned objectives, the company will also benefit in terms of enhanced corporate image, brand name and increased visibility through Dinesh Engineers IPO.

Dinesh Engineers IPO Events

Dinesh Engineers Limited filed the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on March 28, 2018, for the 100% book built IPO.

The offer will open on September 28, 2018, and close on October 3, 2018. The finalisation of basis of allotment is expected to happen by October 9, 2018, and the initiation of refunds is expected to start by October 10, 2018.

The transfer of shares to demat accounts is expected to start on October 10, 2018, and the expected listing date will be October 11, 2018.

Dinesh Engineers IPO Recommendation

Now, let us analyse some of the key strengths and risks related to the business of Dinesh Engineers Limited.

One of the most important strengths of the company is a widespread optic fibre network in India which spans around 6000 km across the states of Maharashtra, Goa, Telangana, Rajasthan and Karnataka.

The company uses modern types of machinery like Horizontal Diagonal drilling and JCBs in order to complete the projects undertaken by them effectively in a timely manner.

The quality of its services is reflected in certifications from ISO 9001:2015, 14001:2015 & OHSAS 18001:2007.

The company has developed good and long-standing relationships with their customers and have been getting repeat orders from their loyal customers for a long time.

Another important strength of the company lies in the great experience of its management team which is complemented by a skilled workforce.

The company also maintains cordial relationships with their suppliers of raw materials as well as contractors. The company also has some promising growth and expansion strategies in place.

Also, the company has shown a good financial track record over the last few years. Their profits and revenues have been showing a growing trend over the last 5 years.

Now, let us discuss some of the risks related to the business of this company.

The company is involved in certain legal proceedings which are pending at different levels of adjudication and any adverse ruling in them may pose a risk to the overall profitability of the company.

The company is exposed to the risk of big fluctuations and adverse weather conditions as these may cause negative impacts on the profitability of the company.

The company’s dependence on its top few customers for its revenues is a risk for the company as the loss in business from one or some of these major customers may cause a considerable decrease in sales and profits.

Also, one of the major concerns for the company is a highly competitive market which is evolving at a very fast pace and if the company is unable to keep up with the market, it may have negative effects on the business and overall profitability of the company.

Any company is dependent on the kind of employees it has. So, if Dinesh Engineers Limited is unable to recruit more talent or retain the existing one, it may adversely affect the business. The results of the company can also be affected negatively if the company is unable to implement its growth strategies in a timely manner.

If the company is unable to determine the creditworthiness of their customers accurately, there may be delays in payments owed to the company due to which cash flows may be impacted which may further create financial problems for the normal and smooth operations of the company.

Any increase in wages of their workers may reduce the profit margins of the company. This is a risk factor because wages in India are significantly less as compared to wages in developed countries which offers them a good competitive advantage.

Any delay or failure in obtaining new licenses or retaining the existing ones required for operating in this industry may have a negative impact on the business and profits of the company.

After carefully analysing various strengths and risks related to the company, it can be said that investors may subscribe to the Dinesh Engineers IPO. The IPO may provide mild returns in the short-term and certainly recommended for long-term investments.

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Dinesh Engineers Limited Management Information

Currently, there are 6 Directors on the Board of Dinesh Engineers Limited. Mr Dinesh Kollaiah Kargal is one of the Promoters and Managing Director of the company. He has a Diploma in Civil Engineering (General) from Sanjay Memorial Polytechnic, Sagar.

He possesses an experience of around 27 years in telecom infrastructure sector. He has won Engineer of the Year Award, 2017 from Jain Engineers’ Society, Mumbai.

Dinesh Engineers IPO Advisors Information

HEM Securities Limited is acting as Book Running Lead Manager to the issue. Link Intime India Private Limited is acting as the Registrar for the Dinesh Engineers Limited IPO.

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