Denta Water & Infra Solutions: Important Facts Investor Should Know

Synopsis: Denta Water & Infra Solutions Ltd, with a market capitalization of Rs. 844.12 crore and near-zero debt of Rs. 0.03 crore, has a robust order book of Rs. 734.74 crore and aims for FY28 revenues of Rs. 500–525 crore, highlighting strong growth potential amid working capital challenges.

Denta Water & Infra Solutions Ltd operates in India’s water and infrastructure segment, a sector gaining increasing attention due to rising urbanisation, government-led water management initiatives, and growing investment in public infrastructure. As the company continues to execute projects across water supply, wastewater, and related infrastructure, there are some key things that investors should know.

Denta Water & Infra Solutions Ltd, with a market capitalization of Rs. 844.12 crore, is trading at Rs. 316.15 per equity share, down by 4.6 percent from its previous day’s close price of Rs. 331.40 per equity share.

Incorporated in 2016 and headquartered in Bengaluru, India, Denta Water and Infra Solutions Limited is a water and infrastructure solutions company engaged in the design, execution, and commissioning of water management projects. The company undertakes groundwater recharge works along with construction projects for railways and highways, and also provides operation and maintenance services for water management infrastructure assets across India.

Stock return

Denta Water & Infra Solutions Ltd has delivered different returns across multiple timeframes, with a 3-month return of -30.84 percent, a 6-month return of 10.38 percent, and a 1-year return of  -2.17 percent from Rs. 346.45 to Current market price. FRom the issue price of Rs. 294 to CMP, the stock has given return of 7.48 percent. 

Financial Leverage

Denta Water & Infra Solutions stands out for its conservative balance sheet, with long-term debt of just Rs. 0.03 crore, making the company virtually debt-free. This low leverage provides financial flexibility and reduces risk during execution-heavy infrastructure cycles. 

Execution Capability

Operationally, the company has demonstrated strong competitiveness with an impressive tender success rate of nearly 75 percent, reflecting technical capability, pricing discipline, and credibility with government and infrastructure authorities.

Cash Flow Health

While the company reported a total cash flow of Rs. 137 crore, operating cash flow remained negative at minus Rs. 72 crore, highlighting stress at the working capital level. This divergence indicates that cash inflows are currently driven more by financing and investing activities rather than core operations, which is an important factor for investors tracking earnings quality and sustainability.

Working Capital Efficiency

Denta’s cash conversion cycle deteriorated sharply from 88 days in FY24 to 1,214 days in FY25, indicating significantly slower cash realization from projects. Inventory days also surged from 115 days in FY24 to 1,306 days in FY25, pointing to project delays, higher material stocking, or slower billing cycles. Such a sharp expansion in working capital can pressure liquidity if not corrected through faster execution and collections.

Financials

In Q2FY26, the company reported revenue of Rs. 74 crore, showing strong growth of ~54 percent YoY compared to Rs. 48 crore in Q2FY25 and a ~10 percent QoQ increase from Rs. 67 crore in Q1FY26. 

EBITDA stood at Rs. 24 crore, up ~60 percent YoY from Rs. 15 crore in Q2FY25 and ~9 percent QoQ from Rs. 22 crore Q1FY26, indicating improved operating efficiency. Profit after tax came in at Rs. 19 crore, marking a sharp ~73 percent YoY growth from Rs. 11 crore in Q2FY25, while remaining flat QoQ compared to Q1FY26. Overall, the results highlight strong year-on-year growth across all metrics with stable profitability on a sequential basis.

Over the past five years, the company has demonstrated strong growth, achieving a revenue CAGR of 19 percent, a profit CAGR of 11 percent, reflecting both its operational performance and market confidence.  

A return on equity (ROE) of about 18.4 percent and a return on capital employed (ROCE) of about 25.2 percent and debt to equity at 0.03, demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 12.9x lower as compared to its industry P/E 18.6x.

Institutional Shareholding Trends

Foreign institutional investors reduced their stake from 1.88 percent in March 2025 to 0.25 percent by September 2025, while domestic institutional investors trimmed holdings from 5.12 percent to 1.9 percent over the same period. However, confidence from marquee investors remains partially intact, with Abakkus Diversified Alpha Fund 2, managed by Sunil Singhania, holding a meaningful 1.27 percent stake, which lends some comfort to long term business prospects.

Order Guidance

As of the latest update, the company’s order book stands at Rs. 734.74 crore, offering strong revenue visibility for the next two to two and a half years. Additionally, the order pipeline is around Rs. 750 crore, and management has guided for fresh order inflows of approximately Rs. 1,000 crore in FY26. This robust order environment supports sustained growth, provided execution and cash flows improve.

Revenue Guidance

Denta Water & Infra Solutions Ltd reported H1 FY26 cumulative revenue of Rs. 141.54 crore and has guided to cross Rs. 300 crore for the full year. For FY27, management expects a further 30 percent increase, targeting revenues in the range of Rs. 375 to Rs. 400 crore. Looking ahead to FY28, the company aims for another 25 to 30 percent growth, translating into revenues of around Rs. 500 to Rs. 525 crore, positioning Denta as a fast growing water infrastructure player if operational efficiencies are strengthened.

Denta Water & Infra Solutions offers strong growth potential backed by a robust order book, healthy return ratios, and a near-debt-free balance sheet in a favourable water infrastructure sector. However, stretched working capital, negative operating cash flows, and declining institutional ownership remain key risks, making execution efficiency and cash flow improvement critical for sustaining long-term value.

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