Dhruv Consultancy Services IPO Review (BSE SME)

Dhruv Consultancy Services

Dhruv Consultancy Services IPO comprises 42,96,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 54 per equity share. The company conducts traffic surveys, engineering surveys, undertakes Project Management Consultancy, Consultancy works of PPP Projects and Tolls. The Shares shall be listed on BSE SME Platform.

Dhruv Consultancy Services: IPO Details
Issue Period 27 April – 2 May 2018
Issue Size  42,96,200 shares (INR 23.2 crore)
Issue Type  Fresh Issue of Equity
Issue Price INR 54 per share
Face Value Rs. 10 per Share
Minimum  Lot 2,000 shares
Book Running Lead Managers HEM SECURITIES LTD
Listing BSE SME platform
Name of the Registrar LINK INTIME 

About Dhruv Consultancy Services
  • Dhruv Consultancy Services an infrastructure consultancy company providing design, engineering, procurement, construction and integrated project management services for Highways, Bridges, Tunnels, Architectural, Environmental Engineering and Ports. Our 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.
  • Dhruv Consultancy Services clientele include 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.
  • Dhruv Consultancy Services was incorporated in 2003 and have over the years developed a track record of working for majority of projects with government bodies and public sector undertakings. As of December 31, 2017, its has provided a range of consultancy services on 41 projects in the area of Highways, Bridges, Tunnels, Architectural, Environmental Engineering and Ports.
  • The company has a qualified and professional employee base of over 313 employees, including 240 Engineers as on December 31, 2017.
  • Companies Order Book as of December 31, 2017 stood at 131 Crores.
  • The breakup of company’s consultancy  income is provided below:
    (Rs. in Lakhs)
    Division FY14 FY15 FY16 FY17
    Highways 902.61 938.5 1063.99 2379.47
    Bridges 443.26 598.25
    Tunnels 5.1
    Architectural 4.38 1.72 2.13
    Environmental Engg 2.63 2.58 1.7
    Ports 57.43
    Total 902.61 945.51 1511.54 3044.08
Dhruv Consultancy Services: Financials
(Rs. In Lakhs)
Particulars 9m Fy18 Fy17 Fy16 Fy15 Fy14
A. INCOME          
Revenue From Operations 3,348.26 3,044.08 1,511.54 945.51 902.61
Other Income 3.91 2.16 3.79 28.88 14.14
Total Income(A) 3,352.16 3,046.24 1,515.33 974.39 916.75
B.  EXPENDITURE          
Employee expenses 821.14 685.4 507.88 288.25 236.63
Financial Cost 127.97 186.56 86.24 29.5 10.76
Depreciation   and   amortization 72.82 85.68 34.88 29.77 6.69
Others Expenses 1,589.33 1,594.01 658.04 492.31 492.06
Total Expenses(B) 2,611.26 2,551.65 1,287.04 839.83 746.14
Profit  before tax  740.9 494.6 228.29 134.56 170.61
Profit before tax 740.9 494.6 228.29 134.56 170.61
Total Tax  200.79 186.44 96.08 55.59 57.94
Profit After Tax 540.11 308.16 132.21 78.97 112.67
Net Profit Margin % 16.13% 10.12% 8.75% 8.35% 12.48%
Share Capital 100 38 30 30 30
 Reserves & Surplus 1,308.57 830.46 522.3 390.09 311.12
Net Worth 1,408.57 868.46 552.30 420.09 341.12
RONW % 38.34% 35.48% 23.94% 18.80% 33.03%
NAV 26.08 228.5 184.1 140.0
Face Value 10
Post Issue Equity 1430
IPO Price 54
Price/Book Value 2.07
EPS Post Issue ( annulized) 5.04
PE – (annuallized) 10.72
CAGR Sales 3 Yrs 49.96%
CAGR Net Profit 3 Yrs 39.85%
Market Cap 7722.00 Lacs
Market cap / Sales 2.54
Dhruv Consultancy Services IPO: Issue Objectives
  • Repayment/ prepayment of certain indebtedness. 
  • To Meet Working Capital requirements.
  • General Corporate Expenses.
  • Issue Expenses.
Dhruv Consultancy Services IPO: Pros
  • Dhruv Consultancy Services total revenue and net profit have shown healthy CAGR in last five Financial Years. Its total revenue has increased from Rs. 510.85 lakhs for Fiscal 2013 to Rs. 3046.24 lakhs for Fiscal 2017, at a CAGR of 56.27%. Its net profit has increased from Rs. 34.52 lakhs for Fiscal 2013 to Rs. 308.16 lakhs for Fiscal 2017, at a CAGR of 72.85%.
  • Company has good  orders on hand.
  • Dhruv Consultancy Services is a pan India company having its presence in 10 states in India namely Maharashtra, Gujarat, Himachal Pradesh, Chattisgarh, Karnataka, Delhi, Goa, Rajasthan, Haryana and Tamil Nadu.
  • To enhance its competitive edge , the company has entered into MOU with various companies
    • MoU with HSS Engineering Sdn Bhd 
    • MoU with Consistent Engineering Consultants, Dubai.
    • MoU with IRClass Systems & Services Pvt. Ltd.
  • The company has its presence in following areas:
    • Pre Tendering Services (Survey and Investigations, Estimating and Costing, Traffic Study and Analysis, Feasibility Study, Detailed Project Report)
    • Post Tendering Activities (Project Management Consultancy in areas of  Supervision of works, Billing and Quality Control, Contract Management, Monitoring Operation & Maintenance works
    • Advisory Services:  Financial Engineering, Techno Legal Services, Lenders Engineering Services, Technical Audits, Structural Audits, Bridge Inspection.
    • Design:  Preliminary Design of Highways & Bridges, Detailed Design of Highways. Proof Checking of Designs of Highways, Detailed Design of Bridges
Dhruv Consultancy Services IPO: Cons
  • Dhruv Consultancy Services has high Trade receivables. For the financial years 2017 and 2016, its trade receivables were Rs. 1481.88 lakhs and Rs. 913.23 lakhs, respectively, which constituted 48.65% and 60.12% respectively of its total revenue from operations for the same periods.
  • Company has not paid any dividends in the past.
  • Dhruv Consultancy Services used most of its reserves to issue bonus shares.
Softtech Engineers IPO: Assessment
  • Consultancy services are emerging as one of the fastest growing service segments in India A large number of consultancy firms and individual consultants are operating in India at various levels across the sectors.
  • Demand for company’s services is largely dependent on the level of investments and the Government’s spending on infrastructure projects in India. Current emphasis of the Government on this sector bodes well for the Government
  • After the IPO, Promoters stake in the company  shall stand at 69.94 %.
  • The stock is being offered at a PE of  around 10 based on annualized 9 month  FY 17-182 earnings  and on a fully diluted equity after the IPO. This looks reasonable.
  • I intend to apply in Dhruv Consultancy Services IPO ( see next para) as the issue is reasonably  priced , company has good profitability metrics and has shown good compounded growth rate in Revenues and Profits.
  • Cancelled my application in Dhruv Consultancy Services (BSE SME IPO) as subscription not picked up yet. Also No grey market activity reported.
  • This is  an SME issue that shall be listed on BSE SME platform and compared to issues that list on BSE/NSE, such issues carry more risk.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk. 

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