Dinesh Engineers Limited IPO Review: Should you Invest?

Dinesh Engineers Limited IPO opens today. It has planned to raise Rs 183 crore at lower price band and Rs 185 crore at higher end of price band. The company has planned to sell up to 1,00,00,000 equity shares through this issue.

Investment Rationale

• As of July 2018, Dinesh Engineers has laid fiber of around 17,000 Kms for telecom vendors, including fibe laid under vendor projects and network running across 10 states in India.
• The company has total order book was approximately Rs 420 crore as of April 2018.
• The company has established optic fiber network in India. Further, the company has strong project management and execution capabilities.
• The company’s growth is majorly attributable due to efficient business model that involves careful identification and assessment of the project with emphasis on cost. The company’s core business is leasing the fibre and duct on IRU basis to telecom operators
• The company has strong relationships with major clients. 

Purpose of the issue

The objects of the IPO are:

1. Setting up & expansion of further OFC Network under IP-1 License;
2. To achieve the benefits of listing their Equity Shares on the Stock Exchanges.
3. Offer related expenses
4. General expenses of the corporate

Dinesh Engineers IPO Detail

• Issue Open: September 28, 2018 – October 3, 2018
• Issue Type: Book Built Issue IPO
• Issue Size: 10,000,000 Equity Shares of Rs 10 aggregating up to Rs 185 Cr
• Issue Price: Rs 183-Rs185 Per Equity Share
• Minimum Order Quantity: 80 Shares
• Listing At: NSE, BSE
• Allotment status at NSE
• Credit of Shares to the Demat Account: October 3, 2018
• Date of listing of IPO Shares: October 5, 2018

Valuation – Should you Invest?

The company’s fiber leasing business is witnessing higher demand. There is minimal operating cost involved in leasing the fiber and the company has posted high Ebitda margin for this business of 85-90 per cent.

Dinesh Engineers’ revenue and net profit is growing at a compounded annual rate of 57 percent and 119 percent respectively since last two years untill March 2018. This is driven on the back of higher revenue bookings in the year ended March 2018. The company has booked unbilled revenue worth Rs 122 crore in the FY 18 compared with Rs 24 crore in the year ended March 2016.

Further, the company is expected to benefit from increased data consumption. The demand for deep fiberisation of networks will remain elevated due to future deployments like 5G networks and internet of things.

The investors may subscribe to the Dinesh Engineers Limited IPO for long-term gains.