Desco Infratech Limited is coming up with an IPO with a fresh issue of 20,50,200 shares worth INR 30.75 crores. The company aims to set up a corporate office in Surat, purchase machinery, fund the working capital requirements, and meet general corporate purposes. 

Desco Infratech IPO – Important Dates

Desco Infratech Limited IPO  – Company Profile

The Company is engaged in providing infrastructure and maintenance services to city gas distribution divisions in India. They engage in activities such as pipeline laying, installation, testing, erection and commissioning for Piped Natural Gas (PNG) utilised by both domestic and commercial users. 

The company’s Operation and Maintenance services (“O&M Services”) encompass both underground and above-ground gas pipeline work for carbon steel and MDPE pipelines. The Company has recently begun offering services in the power division, focusing on the installation, connectivity, commissioning, and erection of Low Tension (LT) and High Tension (HT) cables. 

Desco Infratech Ltd IPO Fundamental Analysis 

Desco Infratech’s revenue rose from ₹2,928.21 lakhs in March 2023 to ₹2,949.47 lakhs in March 2024. PAT grew to ₹345.80 lakhs, with EPS increasing to ₹6.95. RoNW improved to 28.83%, reflecting strong profitability.

• Revenue Trend: The revenue increased from ₹2928.21 lakhs in March 2023 to ₹ 2949.47 lakhs in March 2024. The revenue for the current year’s 6-month period ending September 2024 is INR 2274.50 lakh. 
• Equity and Liabilities: Both equities and liabilities have shown a consistent increase over the periods, reflecting potential growth and expansion. 
• Profitability: The profit after tax (PAT) increased from ₹122.72 lakh in March 2023 to ₹345.80 lakh in March 2024, boosting investor confidence. The profit for the period ending September 2024 is ₹338.07 lakh. 
• Earnings per Share (EPS): The diluted EPS increased from ₹2.73 in March 2023 to ₹6.95 in March 2024, reflecting higher earnings per share for investors. The diluted EPS for the period ending September 2024 is ₹6.03. 
• Return on Net Worth (RoNW): The RoNW has increased from 24.37% to 28.83%, indicating an increase in the company’s ability to generate returns on shareholder equity. 
• Financial Position: Total assets have increased, suggesting potential business growth. However, the current ratio has increased, indicating strengthening liquidity and potential challenges in meeting short-term obligations. 

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Desco Infratech IPO Financial Analysis

Desco Infratech Limited IPO  Peer Comparison

Desco Infratech Limited has a face value of ₹10 per share, an EPS of ₹6.95, and an RoNW of 28.83%. Rudra Gas Enterprise Limited has a lower RoNW of 18.01% but a P/E of 10.17. Likhita Infrastructure Limited has the highest NAV at ₹78.62.

Desco Infratech Ltd IPO Objective

The main objective of Desco Infratech’s IPO is to utilise INR 1.04 crores for the Surat corporate office, INR 1.68 crores for machinery, INR 18 crores for working capital, and the remaining funds for strategic initiatives, acquisitions, branding, and marketing.

1. To set up a corporate office in Surat: In line with the strategic objectives and to enhance workflow efficiency, the company intends to set up a corporate office in Surat, Gujarat, for business operations. The company plans to utilise INR 1.04 crores for the said purpose. 
2. To purchase machineries: The Company intends to purchase new concrete mixer machines for the business operations, amounting to INR 1.68 crores from the Net Proceeds. 
3. Funding working capital requirements: The business of the company is working capital intensive. The company intends to utilise INR 18 crores from Net Proceeds to meet its working capital requirement.

4. General Corporate Purpose: The company will deploy the remaining amount for general corporate purposes, including strategic initiatives, partnerships, acquisitions, branding, marketing, facility upgrades, client referrals, and other business needs.

Desco Infratech IPO Risks And Challenges

Desco Infratech relies heavily on key customers for a significant portion of its revenue, and losing them could impact profitability. Past negative cash flows may affect growth. Regional dependence in Gujarat, Haryana, Uttar Pradesh, and Punjab poses risks.

1. The company is highly dependent on certain key customers for a substantial portion of its revenues. Loss of relationship with any of these customers may have a material adverse effect on the profitability and results of operations.

2. The Company had negative cash flows in the past years, details of which are given below. Sustained negative cash flow could impact the growth and business.

3. The company generates a major portion of sales from operations in certain geographical regions, especially Gujarat, Haryana, Uttar Pradesh and Punjab. Any adverse developments affecting the operations in these regions could have an adverse impact on the revenue and results of operations.

Desco Infratech Ltd IPO – Industry & Market Potential

India’s Infrastructure forms an integral part of the country’s economic ecosystem. There has been a significant shift in the industry that is leading to the development of world-class facilities across the country in the areas of roads, waterways, railways, airports, and ports, among others.

The infrastructure sector has become the biggest focus area for the Government of India. India’s GDP is expected to grow by 8% over the next three fiscal years, one of the quickest rates among major, developing economies, according to S&P Global Ratings.

Desco Infratech Limited IPO  – Type of Offer

Desco Infratech Limited is launching an IPO with a fresh issue of 20,50,200 shares worth INR 30.75 crores. The proceeds will be used to set up a corporate office in Surat, purchase machinery, fund working capital, and meet general corporate purposes.

Desco Infratech IPO Offer Size

The offer size is INR 30.75 crores, with Desco Infratech Limited issuing 20,50,200 fresh shares. The proceeds will be used to set up a corporate office in Surat, purchase machinery, fund working capital, and meet general corporate purposes.

Desco Infratech Limited IPO  Allotment Structure

Desco Infratech Limited’s allocation will be as follows: 50% for Qualified Institutional Buyers (QIB), 15% for Non-Institutional Investors (NII), and 35% for Retail Individual Investors (RII) according to SEBI regulations. 1,07,000 shares are reserved for market makers. 

● Qualified Institutional Buyers (QIB): As per SEBI regulations, 50% of the shares offered through the IPO will be reserved for Qualified Institutional Buyers. These include entities such as banks, mutual funds, and insurance companies.

● Non-Institutional Investors (NII): 15% of the shares will be reserved for Non-Institutional Investors. These typically include corporate bodies or individuals investing more than Rs.2 lakhs.

● Retail Individual Investors (RII): The remaining 35% of the shares will be allotted to Retail Individual Investors. These individual investors apply for shares with a total value of less than Rs.2 lakhs. 

● Market Maker Reservation: A portion of shares, i.e. 1,07,000 shares, are reserved for market makers. 

How to apply for the Desco Infratech IPO?

To apply for the Desco Infratech Limited IPO through Alice Blue, follow these steps:

Open a Demat and Trading Account: If you don’t have one already, you must open a Demat and trading account with Alice Blue.

1. Check for IPO Details: Once your account is active, you can check for the Desco Infratech Limited IPO details in the IPO section of the Alice Blue platform.
2. Place the Bid: Enter the number of shares you wish to buy and place your bid within the IPO’s price band.
3. Submit the Application: Confirm all your details and submit your application.

 You can apply for the Desco Infratech Limited IPO at Alice Blue in just a few clicks!

Check Allotment Status: After the allotment process, you can check the allotment status to see if you have received any shares.

Please note that the allotment of shares is not guaranteed and will depend on the demand for the IPO.

How do you check Desco Infratech IPO Allotment Status?

Checking the allotment status of an IPO in Alice Blue is usually straightforward. Please follow these general steps:

1. Log in to your Alice Blue Account: You can do this through the Alice Blue website or the trading app.
2. Navigate to the Portfolio or IPO Section: This might differ based on the layout of Alice Blue’s platform, but generally, you can find the status of your IPO application under the ‘Portfolio’ or ‘IPO’ section.
3. Find the IPO Allotment Status: Look for a sub-section called ‘IPO Allotment Status’ or something similar. This is where you can see the status of the IPOs you have applied for.
4. Select the Desco Infratech Limited IPO: If you have applied for multiple IPOs, there might be a dropdown menu or a list where you can select the IPO you are interested in. Select the Desco Infratech Limited IPO.
5. Check the Status: The status of your application should be displayed here. If the shares have been allocated to you, it would be mentioned here.

 If you face any issues, we request you to reach out to our customer support team at Alice Blue for detailed assistance. 

Apart from Alice Blue, there are other ways to check the allotment status of the Desco Infratech Limited IPO:

● Registrar’s Website: Visit the website of Bigshare Services Private Limited, the registrar of the Desco Infratech Limited IPO. On the homepage, look for the ‘IPO Allotment Status’ option. You must enter your PAN, application, or Demat account number to check your allotment status. Click on the ‘Submit’ button to view your IPO allotment status. 

● BSE SME: You can also check the allotment status on the official websites of the Bombay Stock Exchange’s (NSE) Small Medium Exchange (SME) Platform. You would need your application number and PAN to check the status. 

Please note that the allotment status will only be available after completing the allotment process, a few days after the IPO window closes.

Desco Infratech Ltd IPO Offer Registrar

The registrar for the Desco Infratech Limited IPO is Bigshare Services Private Limited. They are responsible for ensuring the IPO allotment and refund processes are carried out smoothly.

Contact information for the registrar: 

Bigshare Services Private Limited

S6-2, 6th Floor, Pinnacle Business Park, 

Mahakali Caves Road,

Andheri East, Mumbai- 400093, 

Maharashtra, India

Email: ipo@bigshareonline.com

Website: https://www.bigshareonline.co

Desco Infratech SME IPO – FAQs