DINESH ENGINEERS LIMITED IPO Price Band : ` 183 ` 185. Our Recommendation SUBSCRIBE for long term

Transcription

1 DINESH ENGINEERS LIMITED IPO Price Band : ` 183 ` 185 Our Recommendation SUBSCRIBE for long term

2 THE OFFER Issue Open : 28 Sep 2018 to 03 Oct 2018»» Issue Type: Book Built Issue IPO»» Issue Size: 10,000,000 Equity 10 aggregating up to ` 185 cr»» Face Value: ` 10 Per Equity Share»» Issue Price: ` ` 185 Per Equity Share»» Market Lot: 80 Shares»» Minimum Order Quantity: 80 Shares»» Listing At: NSE, BSE

3 CAPITAL STRUCTURE The share capital of Company, is set forth below:- (Amount in ` except share data) Authorized Share Capital :- 40,000,000 Equity Aggregate value 400,000,000 cr Issued, subscribed and paid up capital before the Issue :- 29,500,000 Equity Aggregate value 295,000,000 cr Present Issue:- 10,000,000 Equity 10 aggregating up to ` 185 cr

4 OBJECT OF THE OFFER The objects of the Offer are Expansion of business by setting up of further OFC Network under IP-1 License. To fund expenditures towards general corporate purposes and To meet public issue expenses

5 COMPANY OVERVIEW Dinesh Engineers is a passive communication infrastructure provider company It has been licensed by the Department of Telecommunications (DoT) and has an infrastructure provider (IP)-I license. Its core business of leasing the fibre and duct on IRU basis to telecom operators is a unique business model which forms a major portion of the revenue. The network infrastructure solutions are being used by Airtel, BSNL, Reliance Jio, Vodafone, Idea, Tata Communications, etc. Since the receipt of the IP-I license, the company has created optic fibre network of around 7,500 kms which runs across the state of Rajasthan, Gujarat, Maharashtra, Goa, Karnataka, Andhra Pradesh and Telangana. As of April 1, 2018, company s order book was Rs 420 crore, which is 1.4 times the revenue of FY18. Recently, the company has also diversified into executing gas pipeline projects. It has undertaken laying gas pipelines in Maharashtra (Mumbai) through sub-contractors assigned by Mahanagar Gas.

6 BUSINESS OPERATIONS DEL s business operations can be classified under 3 heads: Project Execution for Telecom Operators As per the requirement, telecom companies notify the area where they require the fibre network. Once the project is notified, it is assigned to the company, and with ROW permissions, the company initiates the project. Laying fibre under IP-I License (IP-I) Under this segment, the company maintains the assets such as dark fibres, right of way and duct space to grant on lease/rent/sale on IRU basis to the licencees of telecom services providers and other vendors. Operations & Maintenance - It undertakes the operations & maintenance activity for the telecom operators and of the leased fibre maintained under IP-1 License. The operation and maintenance activities involves deploying manpower and tools required for maintenance such as splicing machine, rodometre, OTDR machine, etc.

7 ROAD MAP AHEAD Company objectives are to expand their market share and aim to accomplish this through the following strategies: To enhance the coverage of the Optic fiber network. Expand into business areas that create synergies with current business Augment customer relationships. Enhance project execution capabilities. Continue to focus on strengthening the goodwill of company name.

8 STRENGTHS Established Optic fiber network in India. Strong project management and execution capabilities. Efficient Business Model. Long standing customer relationships with strong repeat business. Experienced Promoter, Management Team and Skilled Workforce. Quality Certification Co-ordial relationship with suppliers and contractors.

9 FINANCIAL HIGHLIGHTS Total Revenues stood Rs cr, Rs cr and Rs 122.5cr, in Fiscal 2018, Fiscal 2017 and Fiscal 2016 respectively. PBT was Rs 95.11cr, Rs 33.79cr and Rs 19.71cr, in Fiscal 2018, Fiscal 2017 and Fiscal 2016 respectively. PAT was Rs 21.27cr, Rs 7.58cr and Rs 4.44cr, in Fiscal 2018, Fiscal 2017 and Fiscal 2016 respectively. As of April 1, 2018, company s order book was Rs 420 crore, which is 1.4 times the revenue of FY18.

10 SNAPSHOT The growth in revenue and PAT has been robust and consistent over the last few years.

11 REVENUE SEGMENTATION The segment-wise revenue details earned by DEL in past 3 fiscal.

12 RISK FOR THE BUSINESS Company is party to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on business. A significant portion of revenue is generated from limited number of large customers and if company is unable to maintain relationship with such customers, it may adversely affect business. The market in which company operate is highly competitive.

13 CONTINUE The loss of key suppliers or their failure to deliver equipment and material on a timely basis could negatively impact business. Changing laws, rules and regulations and legal uncertainties, including adverse application of tax laws and regulations, may adversely affect business.

14 VALUATION DEL is primarily engaged in executing optical fiber laying work for telecom operators and internet service providers in India and has created optic fibre network of around 7,500 kms which runs across the state of Rajasthan, Gujarat, Maharashtra, Goa, Karnataka, Andhra Pradesh and Telangana. On the upper price band of Rs 185 with EPS of Rs for FY18, P/E works out at 8.69x. Taking into consideration, strong financial performance of the company, the positive future outlook, Established Optic fiber network in India and Expansion into other business areas (Gas Pipeline Laying) will generate additional revenue in the upcoming years. Moreover, Government Initiative & Budget Support for Optical Fiber Industry and the rollout of 4G/5G in the country would also propel the demand of optic fibers. Based on the above aspects, we recommend to SUBSCRIBE the IPO for long term benefits.

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