DMR Hydro RI review (May apply)

• The company is engaged in providing engineering consultancy and related services for hydropower segment.
• It is operating in a highly competitive and fragmented segment.
• The company posted steady growth in its top and bottom lines for the reported periods.
• Based on its market price trends, the issue is fully priced.
• Well-informed investors may park moderate fund for long term.

ABOUT COMPANY:
DMR Hydroengineering & Infrastructures Ltd. (DHIL) is engaged in the business of providing engineering consultancy and due diligence services to hy & engineering, due diligence & regulatory, bid management & construction engineering and quality & inspection.

The company offers Hydro Engineering and Infrastructure services viz., Strategic Advisory, Due Diligence Studies, Project Viability Analysis, Cost Benefit Analysis, Risk Analysis, Regulatory Approvals, Monitoring and Evaluation, Geological Studies, Hydrological Studies, Hydraulic Studies, Hydraulic Design of Structures, Geotechnical Design of Surface and Underground Structures, Structural Design and Analysis, Dynamic Analysis, Numerical Analysis, Instrumentation Analysis, Detailed Design and Drawings, Bid level Designs and Drawings, Detailed Project Report, Feasibility Report, Layout Studies and , As Built Drawings, Bid documents, Bill of Quantities, Construction Planning and Scheduling, Construction Management and Method Statements, Design and Engineering Support During Construction, Rate Analysis and Cost Estimates, Contract Management, Procurement Management, Project Management, Project Commissioning, Completion Report, QA/QC plans, Quality Assurance at Site, Pre-Dispatch Inspection, Third Party Inspection, Safety Inspection and O & M stage Inspection.

DHIL deals in Business to Business (B2B) category and caters to both domestic and international markets. Domestically, it has Strong presence across many 15+ states in India with multiple projects in J&K, Uttaranchal, Himachal Pradesh, Rajasthan, Arunachal Pradesh, Maharashtra, Odisha, Jharkhand, Madhya Pradesh, Chhattisgarh etc. Internationally, its business operation in Lao PDR, Bhutan, Nepal, Cambodia, Nigeria.

As of the date of this offer document, it had 62 employees on its payroll. It also hires contract workers as and when needed.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 189685 equity shares of Rs. 10 each at a fixed price of Rs. 140.00 per share to mobilize Rs. 2.66 cr. The RI opens for subscription on November 14, 2024, and will close on December 03, 2024. The company is offering RI in the ratio of 1 for 20 to its eligible stakeholders as of the record date of October 22, 2024. The market lot for trading in RI will be 75 shares.

The full amount is to be paid on application for number of shares applied. Post allotment, shares will be listed on BSE SME. The company is spending Rs. 0.12 cr. for this RI process, and from the net proceeds, it will utilize Rs. 1.93 cr. for working capital, and Rs. 0.61 cr. for general corporate purposes.

The issue is self-managed by the company itself, and KFin Technologies Ltd. is the registrar to the issue, while registrar to the company is Skyline Financial Services Pvt. Ltd. GYR Capital Advisors Pvt. Ltd. is the advisor to the issue.

Post-RI, company's current paid-up equity capital of Rs. 3.79 cr. will stand enhanced to Rs. 3.93 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 55.77 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, it has posted a total income/net profit of Rs. 3.53 cr. / Rs. 0.69 cr. (FY22), Rs. 4.47 cr. / Rs. 0.77 cr. (FY23), and Rs. 7.36 cr. / Rs. 1.54 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 0.75 cr. on a total income of Rs. 4.62 cr. It reported steady growth in its top and bottom lines for the reported periods.

DIVIDEND POLICY:
The offer document is silent on its dividend policy. It has declared dividends of 1% (FY22), 1.1% (FY23), and 1.2% (FY24). It will adopt a prudent dividend policy based on its financial performance and future prospects.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 543410 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 154.45 on October 21, 2024, and opened on an ex-right basis at Rs. 151.00 on October 22, 2024. Since then, it has marked high/low of Rs. 162.95 / Rs. 137.05. The scrip last closed at Rs. 148.00 as of November 12, 2024. For the last 52 weeks' it has posted a high/low of Rs. 210.45 / Rs. 74.75.

The promoters' holding has been constant around 72.15% for the last two quarters ended September 30, 2024. The counter is well managed by vested interests above RI pricing.

Conclusion / Investment Strategy

The company is operating in a highly competitive and fragmented segment of advisory in hydropower segment and related services. It posted steady growth in its top and bottom lines for the reported periods. Based on its financial performance so far and the movement of market price, the issue appears fully priced. Well-informed investors may park moderate fund for long term.

Review By Dilip Davda on November 12, 2024

Review Author

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 DMR Hydroengineering Rights Issue 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if DMR Hydroengineering Rights Issue 2024 worth investing. The DMR Hydroengineering Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if DMR Hydroengineering Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in DMR Hydroengineering Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

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