Deepak Builders & Engineers India Limited, a prominent player in the construction industry, is set to launch its Initial Public Offering (IPO) on October 21, 2024, offering investors a unique opportunity to participate in a ₹260.04 crore public issue. The company, known for its large-scale execution of institutional buildings, industrial complexes, residential projects, flyovers, and railway station developments, aims to utilize the IPO proceeds for debt repayment, working capital, and general corporate purposes.

The Deepak Builders & Engineers India IPO includes a Fresh Issue of 107 lakh shares, worth ₹217.21 crore, and an Offer for Sale (OFS) of 21.1 lakh shares, totaling ₹42.83 crore. The subscription period runs from October 21 to October 23, 2024, and the allotment is expected to be finalized by October 24, 2024. The shares will be listed on the BSE SME platform, with a tentative listing date of October 28, 2024.

Key Financial Details and Price Band:

The IPO price band is set between ₹192 to ₹203 per share, with a minimum lot size of 73 shares, making the minimum retail investment ₹14,819. For High-Net-Worth Individuals (HNIs), the minimum required investment is 14 lots (1,022 shares), amounting to ₹2,07,466. Fedex Securities Private Limited is the book-running lead manager, and Kfin Technologies Limited serves as the registrar for the issue.

Financial Performance:

Deepak Builders & Engineers has showcased a strong financial growth trajectory over the past few years. In Fiscal Year 2024, the company reported a revenue of ₹5,167.42 million, compared to ₹4,354.60 million in FY2023 and ₹3,649.87 million in FY2022. The company's EBITDA for FY24 stood at ₹1,175.39 million, significantly improving from ₹528.93 million in FY23. Moreover, the Profit After Tax (PAT) in FY24 was ₹604.10 million, reflecting a steady increase from ₹213.95 million in FY23 and ₹176.64 million in FY22.

This consistent financial performance highlights the company's ability to execute large-scale projects and sustain profitability, making it an attractive option for both retail and institutional investors.

Grey Market Premium (GMP) and Investor Sentiment:

The Grey Market Premium (GMP) for the Deepak Builders & Engineers India IPO is currently trending between ₹42 to ₹57, indicating potential listing gains of 15% - 20%. However, it's essential to note that GMP is an unofficial market indicator and does not guarantee actual price discovery upon listing. Investors are advised to exercise caution when relying solely on GMP for investment decisions.

Objectives of the IPO:

The proceeds from the fresh issue will be allocated towards the following:

 1. ₹300 million will be utilized for repayment or prepayment of certain borrowings.

 2. ₹1,119.56 million will be used for working capital requirements.

 3. The remaining amount will be reserved for general corporate purposes.

This strategic allocation aims to strengthen the company’s balance sheet, reduce debt, and fuel future growth.

Subscription Details and How to Check Allotment:

To track the subscription status of the Deepak Builders & Engineers IPO starting from October 21, investors can visit the Registrar's website for real-time updates. The allotment date is set for October 24, 2024. Investors can check their allotment status through the following steps:

  ▪ Visit the IPO allotment status page on the registrar's site.

  ▪ Select Deepak Builders & Engineers India Limited IPO from the dropdown list.

  ▪ Enter your application number, PAN, or DP Client ID.

  ▪ Submit the details to view your allotment status.

By following these simple steps, investors can easily check whether they’ve secured shares and proceed accordingly with their investment plans.

Industry Outlook and Conclusion:

The Indian construction industry has witnessed robust growth, driven by both government infrastructure projects and private sector developments. As a company with over three decades of experience and a portfolio that includes EPC projects, historical memorial complexes, and railway infrastructure, Deepak Builders & Engineers is well-positioned to capitalize on the growing demand in this sector.

Although the company shows strong financial fundamentals and growth prospects, investors should be cautious about the post-listing performance, as market conditions and demand can fluctuate.

We recommend investors avoid subscribing solely for listing gains, especially considering the higher post-issue P/E ratio compared to the industry. However, for long-term investors with a focus on construction and infrastructure, the IPO could offer value creation over time.

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