Started in 2006, Dinesh Engineers Limited, is Mumbai based passive communication infrastructure provider Company in India, focused on providing passive communication infrastructure services mainly to the Telecom operators and internet service providers ('ISPs'). During the initial phase, they were working towards executing the fibre laying work for many Telecom Operators. Once 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. Key expertise of company 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 fibre leasing, optical fibre network construction, maintenance of duct and optic fibre and optical fibre project turnkey services to various Telecom network operators & broad band Service operators across the states of India. Since the receipt of the IP-I license, company has created their own optic fibre network of around 7500 kms which runs across the state of Maharashtra, Goa, Telangana, Rajasthan and Karnataka. This 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, maximise existing network capacity, improve network performance and availability. Since the year 2011, DEL has laid fibre network of around 9500 Kms for the telecom operators under the Vendor projects which run across the states of Maharashtra, Gujarat, Uttar Pradesh, Bihar, Karnataka, Andhra Pradesh, Chhattisgarh, Goa and Rajasthan. Apart from laying the network under the Vendor project or own network, we are also engaged in the operations & maintenance activity of the fibre network and preventing the underground optic fibre therein from getting cut due to activities like road repairs, digging and expansion works by various authorities. Some of the prominent clients of the Company includes 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. Apart from the above they also has Mahanagar Gas Limited in their client list for gas pipeline work. Majority of company's fibre execution work is done by sub-contracting. As the digging and trenching activity involve a lot of labour force and machinery at scattered locations and as they execute the projects parallely at the same time at different project sites across many states hence they take these labourers and machinery from sub-contractor who are their local representatives for that area. Company also has some exclusive contacts with some contractors who work solely for them. Company's total Order Book was Rs 420.00 Cr, as at April 01, 2018. As of July 31, 2018, company had 239 employees, including 19 employees in senior level, 181 employees in executive and technical staff and 39 employees in non technical staff. As per financial performance, DEL has posted total revenue/net profits of Rs. 25.33 cr. / Rs. 2.62 cr. (FY13), Rs. 23.95 cr. / Rs. 3.05 cr. (FY14), Rs. 51.16 cr. / Rs. 6.90 cr. (FY15), Rs. 122.50 cr. / Rs. 12.90 cr. (FY16), Rs. 169.91 cr. / Rs. 21.98 cr. (FY17) and Rs. 302.78 cr. / Rs. 61.80 cr. (FY18). So company has posted consistent growth over last couple of years in both top line as well as bottom line. Company has posted an average EPS of Rs. 13.69 and average RoNW of 51.90% for last three fiscals. So company works with good margins. Issue is priced at a P/BV of 5.05 as per NAV of 36.60 on 31.03.18. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 12. As per RHP, there is no listed peers and issue looks reasonably priced. On BRLM's front, for Hem Securities Limited this is 50th IPO in the past six years. When we take recent 10 IPOs then out of those 2 issues opened below their offer price and remaining with premium of around 2% to 20% on listing dates. As per financials, company's growth is consistent and very good, RoNW is 51.90% for last three fiscals and issue is priced at P/E of around 12 as per latest earnings. Company is an communication infrastructure provider and with GoI's ambition to provide high speed connectivity to all Gram Panchayats, there will be massive investments in this sector. So the company may maintain same growth rate for next couple of years. So we give SUBSCRIBE rating to this IPO.
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