An .ipa file is a compressed archive, structurally identical to a .zip file. It follows a strict directory hierarchy defined by Apple:
One way to convert IPA to DMG is by using Terminal and Xcode. Here's a step-by-step guide: ipa to dmg
You can use the built-in or Terminal on macOS to create the final DMG: paradiseduo/Converter: Convert an IPA (iOS) to mac App (M1) ipa to dmg