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Dhruv Concultancy BSE SME IPO review (Apply)

Review By Dilip Davda on April 25, 2018

Dhruv Consultancy Services Ltd. (DCSL) is an infrastructure consultancy company providing design, engineering, procurement, construction and integrated project management services for Highways, Bridges, Tunnels, Architectural, Environmental Engineering and Ports. Its services includes Preparation of DPR and feasibility studies for infrastructure projects, Operations & Maintenance Works, Project Management Consultancy Services, Independent Consultancy, Project Planning, Designing, Estimation, Traffic and Transportation Engineering, Financial Analysis, Technical audits, Structural Audit, Inspection of bridges and Techno Legal Services. DCSL has provided services to clientele such as Ministry of Road Transport and Highways, National Highways Authority of India, The City and Industrial Development Corporation of Maharashtra Ltd., Jawaharlal Nehru Port Trust, Maharashtra State Road Development Corporation, Mumbai Metropolitan Region Development Authority, Public Works Department, Maharashtra Tourism etc. Over the years DCSL has developed a track record of working majority of projects with government bodies and public sector undertakings. As of December 31, 2017, company has provided a range of consultancy services on 41 projects in the area of Highways, Bridges, Tunnels, Architectural, Environmental Engineering and Ports. Company has a qualified and professional employee base of over 313 employees, including 240 Engineers as on December 31, 2017. It also outsources certain contracts to the third party services providers.

To part finance its repayment/Pre-payment of certain debts, working capital and general corpus fund needs,  DCSL is coming out with a maiden IPO of 4296000 equity shares of Rs. 10 each at a fixed price of Rs. 54 per share to mobilize Rs. 23.20 crore. Issue opens for subscription on 27.04.18 and will close on 02.05.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Hem Securities Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Issue constitutes 30.05% of the post issue paid up capital of the company. Company has issued entire equity at par so far. It has also issued bonus shares n the ratio of 1.63 shares for every 1 share held in December 2017 and 9 shares for every 1 share held in January 2018. Average cost of acquisition of shares by the promoters is Rs. 0.38 per share. Post issue, its current paid up capital of Rs. 10.00 cr. will stand enhanced to Rs. 14.30 cr.

On performance front, for last four fiscals DCSL has posted turnover/net profits of 9.17 cr. / Rs. 1.13 cr. (FY14), Rs. 9.74 cr. / Rs. 0.79 cr. (FY15), Rs. 15.15 cr. / Rs. 1.32 cr. (FY16) and Rs. 30.46 cr. / Rs. 3.08 cr. (FY17). For first nine months of FY18 it has earned net profit of Rs. 5.40 cr. on a turnover of Rs. 33.52 cr. As on 31.12.17 it had an order book of Rs. 131 cr. plus. It has posted an average EPS of Rs. 2.13 and an average RoNW of 28.85% for last three fiscals. Issue is priced at a P/BV of 3.83 on the basis of its NAV of Rs. 14.09 as on December 2017 (post adjustment of bonus issued in January 2018) and at a P/BV of 2.07 on the basis of its post issue NAV of Rs. 26.08 per share. Company suffered a setback in bottom line for FY15 and super profits for FY17 and for nine months of FY18. Company has utilized most of reserves as bonus shares. For last five fiscals, DCSL has shown healthy CAGR of 56.27% in revenues and CAGR of 72.85% in net profits. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 11 against industry average of 73. Thus issue is priced very reasonably. As per offer documents it has shown Artefact Proj and MITCON Consultancy as its listed peers and they are trading at a P/Es of around (0) and 24 (as on 25.04.18). Artefact has incurred losses for quarter ended 31.12.17.

On merchant banker’s front, this is 47th mandate from its stable in last six fiscals. Out of last 10 listings, 1 open at a discount to offer price and the rest opened with a premium ranging from 2.7% to 20% on the day of listing.

Conclusion / Investment Strategy

Considering recent performance, orders on hand and the future prospects for the segment, investment in this issue may be considered.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on April 25, 2018

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

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: ).

Dhruv Consultancy IPO FAQs

  1. 1. Why Dhruv Consultancy IPO?

    The initial public offer (IPO) of Dhruv Consultancy Services Limited offers an early investment opportunity in Dhruv Consultancy Services Limited. A stock market investor can buy Dhruv Consultancy IPO shares by applying in IPO before Dhruv Consultancy Services Limited shares get listed at the stock exchanges. An investor could invest in Dhruv Consultancy IPO for short term listing gain or a long term.

  2. 2. How is Dhruv Consultancy IPO?

    Read the Dhruv Consultancy IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Dhruv Consultancy IPO what should investors do?

    Dhruv Consultancy IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Dhruv Consultancy IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Dhruv Consultancy IPO good?

    Our recommendation for Dhruv Consultancy IPO is to subscribe.

  5. 5. Is Dhruv Consultancy IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Dhruv Consultancy IPO.

  6. 6. When will Dhruv Consultancy IPO allotment status?

    The Dhruv Consultancy IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Dhruv Consultancy IPO allotment status to check.

  7. 7. When will Dhruv Consultancy IPO list?

    The Dhruv Consultancy IPO will list on Thursday, May 10, 2018, at BSE SME.