Deepak Builders & Engineers India Limited made its debut on Indian stock exchanges on October 28, 2024, but faced a subdued listing, with shares trading at a 2% discount to the issue price. The shares opened at ₹198 against the IPO price range of ₹192-₹203. Despite the lukewarm response, the company successfully raised ₹260.04 crore through its Book Built Issue, comprising a fresh issue of 107 lakh shares worth ₹217.21 crore and an Offer for Sale (OFS) of 21.1 lakh shares amounting to ₹42.83 crore.

IPO Subscription and Details

The subscription period for the Deepak Builders & Engineers IPO commenced on October 21, 2024, and closed on October 23, 2024. The IPO received robust demand, with an impressive subscription rate of 41.54 times on its final day. Retail investors were required to invest a minimum of ₹14,819, while High-Net-Worth Individuals (HNIs) needed to invest a minimum of ₹2,07,466 for 14 lots.

The Grey Market Premium (GMP) for the IPO was projected at ₹42, indicating a potential listing gain of 20% prior to the listing. However, the actual market response reflected a more cautious sentiment among investors, leading to the shares opening at a discount.

Financial Performance and Metrics

Deepak Builders & Engineers India has established itself as a significant player in the engineering and construction sector, focusing on large-scale projects in both government and private sectors. Founded in 1990 by Deepak Kumar Singal, the company has completed over 60 projects over its 30-year history, covering a diverse range of infrastructure works, including hospitals, stadiums, and rail infrastructure.

Financially, the company reported consistent growth, with revenues for Fiscal 2024, 2023, and 2022 standing at ₹5,167.42 million, ₹4,354.60 million, and ₹3,649.87 million, respectively. The Profit After Tax (PAT) for the same periods was ₹604.10 million, ₹213.95 million, and ₹176.64 million, showcasing strong profitability and operational efficiency.

The company has a pre-issue EPS of ₹16.84 and a post-issue EPS of ₹12.96, with pre-issue and post-issue P/E ratios of 12.05x and 15.66x, respectively. These metrics, compared with an industry P/E of 25.03x, suggest a fair pricing of the IPO. Additionally, the company reported a RoCE of 41.72% and a RoE of 39.39% for FY24, indicating effective use of capital.

Objectives of the IPO

The proceeds from the Deepak Builders & Engineers IPO will be directed towards:

1. Repayment of borrowings amounting to ₹300 million.
2. Funding working capital requirements totaling ₹1,119.56 million.
3. General corporate purposes to bolster overall operational capacity.

Investors can check their IPO allotment status through the registrar’s website by selecting the Deepak Builders & Engineers IPO from the dropdown and entering the required details.

Recommendation: While the listing was subdued, and the current market sentiment appears cautious, risk-seeking investors may still find value in applying for the Deepak Builders & Engineers India Limited IPO for potential short-term gains. Long-term investors, however, are advised to proceed with caution given the current market conditions.

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