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Review By Dilip Davda on June 22, 2024
• DTL is in the business of IT consultancy, providing solutions to stay ahead of curve to its clients.
• It has posted surprising financial performance with heavy ups and down for the reported periods.
• Based on annualized FY24 negative earnings, the issue is having a negative P/E.
• It has huge carried forward losses, that may take time to wipe it out.
• There is no harm in skipping this High-Risk pricey offer.
ABOUT COMPANY:
Diensten Tech Ltd. (DTL) - erstwhile known as JKT Consulting Ltd., is into the business of Information Technology ('IT') professional resourcing, IT Consultancy, IT Training and Software AMC. It connects clients to individuals with a specific IT skill set, manage capacity across a team, or deliver in-house technology experts to take client project to full delivery. DTL is a next-generation IT consultancy service provider that helps enterprises reimagine their businesses for the digital age. It provides end-to-end professional solutions to make large companies and organizations more competitive by combining in-depth knowledge of a wide range of business sectors and innovative technologies with a fully collaborative approach. DTL is a lifelong learning partner for enterprises, helping them build skills in emerging technologies at scale. Its Corporate Training division helps build innovative learning modules for organizations in the workplace by structuring a smarter workforce, supporting changes and driving growth.
The company started business under the name of JKT Consulting Limited with consulting services in the area of SAP Software/ SAP Training Centres and Domain Consulting Services. From the year 2014-15 onwards, it started shifting business focus towards Information Technology Consultancy, Training, Software Sale, Software AMC and related services as its core business. To further strengthen the said domain, the Company entered into a Business Transfer Agreement dated April 30, 2022 with JK Technosoft Limited. Pursuant to this Agreement, it has acquired Professional Services & Training (PS & T) business from JK Technosoft Limited with effect from April 01, 2022.
DTL has been providing technical consultancy, training, software services and other services to large corporates of the country, multinational companies, small and medium enterprises of diversified sectors. Post-acquisition of PS & T business as above mentioned, it is focusing on this segment specifically. The foundation lies in its strong culture amongst the skilled and professional resources that are trained, upgraded and equipped with the best modern technology to ensure top quality customer services. Some of its prestigious clients are Illumina Technology Solutions LLC, Mobiquest Mobile Technologies Pvt. Ltd, ONE97 Communications Limited, Thomas Cook (India) Ltd, Capgemini Technology Services India Ltd, Tata Consultancy Services Limited, Maruti Suzuki India Ltd, Schenker India Pvt Ltd, Motherson Technology Services Limited and Pepsico Global Business Services India LLP. As of December 31, 2023, it had 448 employees on its payroll.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 2208000 equity shares of Rs. 10 each to mobilize Rs. 22.08 cr. at the upper cap. It has announced a price band of Rs. 95 - Rs. 100 per share. The issue opens for subscription on June 26, 2024, and will close on June 28, 2024. The minimum application to be made is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.73% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 3.81 cr. for payment of liabilities raised against outstanding payment of consideration for JK Technosoft business transfer agreement, Rs. 11.77 cr. for working capital and the rest for general corporate purposes.
The issue is solely lead managed by Corporate Professionals Capital Pvt. Ltd., and KFin Technologies Ltd. is the registrar to the issue. Share India Securities Ltd. is the market maker for the company. The IPO is underwritten to the tune of 15% by Corporate Professionals and up to 85% by Share India Capital Services Pvt. Ltd.
The company has issued entire equity capital at par value so far. The average cost of acquisition of shares by the promoters is Rs. 10 per share.
Post-IPO, company's current paid-up equity capital of Rs. 6.05 cr. will stand enhanced to Rs. 8.26 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 82.61 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit/ - (loss) of Rs. 5.25 cr. / Rs. 1.17 cr. (FY21), 0.77 cr. / Rs. 0.01 cr. (FY22), Rs. 37.60 cr. / Rs. 0.16 cr. (FY23). For 9M of FY24 ended on December 31, 2023, it posted a net loss of Rs. - (1.72) cr. on a total income of Rs. 26.21 cr. Thus the company has posted surprised set of financial performances for the reported periods. In fact, it has carried forward losses that has kept mounting so far.
For the last three fiscals, it has reported an average EPS of Rs. 2.47, and an average RoNW of - (15.23) %. The issue is priced at a P/BV of 23.87 based on its NAV of Rs. 4.19 as of December 31, 2023, while its post-IPO NAV info is missing from the IPO price band ad. Negative NAV as of December 31, 2023 is the major concern.
If we attribute annualized FY24 negative earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a Negative P/E. Based on its FY23 earnings, the P/E stands at 526.32, at exorbitant level.
For the reported periods, the company has posted PAT margins of 22.38% (FY21), 2.00% (FY22), 0.43% (FY23), - (6.58) % (9M-FY24), but RoCE margins data for the said periods is missing from the offer document.
DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown ANI Integrated, Integrated Personnel, as their listed peers. They are trading at a P/E of 25.7 and 20.3 (as of June 21, 2024). However, they are not comparable on an apple-to-apple basis.
MERCHANT BANKER'S TRACK RECORD:
This is the 1st mandate from Corporate Professionals in the ongoing fiscal, and has no past track record.
Review By Dilip Davda on June 22, 2024
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Diensten Tech Limited offers an early investment opportunity in Diensten Tech Limited. A stock market investor can buy Diensten Tech IPO shares by applying in IPO before Diensten Tech Limited shares get listed at the stock exchanges. An investor could invest in Diensten Tech IPO for short term listing gain or a long term.
Read the Diensten Tech IPO recommendations by the leading analyst and leading stock brokers.
Diensten Tech IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Diensten Tech IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Diensten Tech IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Diensten Tech IPO.
The Diensten Tech IPO allotment status will be available on or around July 1, 2024. The allotted shares will be credited in demat account by July 2, 2024. Visit Diensten Tech IPO allotment status to check.
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