Deepak Builders & Engineers India Limited, a prominent name in India’s construction and engineering sector, is set to launch its IPO to raise ₹260.04 Crores. Established in 1990 by Deepak Kumar Singal, the company has gained a reputation for successfully executing major construction projects across India, including institutional buildings, hospitals, residential complexes, and rail infrastructure. With over 30 years of experience, Deepak Builders focuses on public and private sector projects, particularly in large-scale engineering works.

IPO Overview

The Deepak Builders & Engineers IPO consists of a Fresh Issue of 107 Lakh Shares valued at ₹217.21 Crores and an Offer for Sale (OFS) of 21.1 Lakh Shares worth ₹42.83 Crores. The subscription window for this Book Built Issue is open from October 21 to October 23, 2024, and the shares are expected to be listed on BSE and SME by October 28, 2024.

Investors can subscribe to shares at a price band of ₹192 to ₹203 per share. The minimum investment for retail investors is 73 shares, translating to ₹14,819, while HNIs are required to invest in a minimum of 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 IPO.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Deepak Builders & Engineers India IPO is anticipated to range from ₹57 to ₹42. While this indicates a potential 15-20% listing gain, it’s crucial to note that GMP values are speculative, based on market sentiment rather than actual financial metrics. Investors are cautioned against relying solely on GMP to gauge potential returns, as it does not provide accurate price discovery ahead of the stock’s official listing.

Subscription Status and Allotment

Investors can track the live subscription status of the Deepak Builders IPO starting from October 21, 2024. This data will provide insight into the demand for the IPO among retail investors, institutional buyers, and HNIs.

The allotment date is scheduled for October 24, 2024. Investors can check their allotment status through the Kfin Technologies portal by following these steps:

Navigate to the IPO allotment status page.

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

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

Submit your details to view the status.

Objectives of the IPO

The fresh issue proceeds will be directed toward the following:

₹300.00 Million will be used for the repayment or prepayment of certain borrowings.

₹1,119.56 Million will fund the company’s working capital requirements.

The remaining funds will cover general corporate expenses.

Financial Performance and Valuation

Deepak Builders & Engineers has shown consistent growth over recent years. For Fiscal 2024, the company reported a revenue of ₹5,167.42 Million, up from ₹4,354.60 Million in Fiscal 2023 and ₹3,649.87 Million in Fiscal 2022. The company’s EBITDA figures also reflect strong growth, reaching ₹1,175.39 Million in Fiscal 2024, compared to ₹528.93 Million in Fiscal 2023 and ₹438.71 Million in Fiscal 2022.

Profit after Tax (PAT) for Fiscal 2024 was ₹604.10 Million, a substantial increase from ₹213.95 Million in Fiscal 2023 and ₹176.64 Million in Fiscal 2022. This indicates the company’s improving profitability, which aligns with its strategic expansion in the infrastructure sector.

For the IPO, the company has set a pre-issue EPS of ₹16.84 and a post-issue EPS of ₹12.96. The P/E ratios are 12.05x pre-issue and 15.66x post-issue, compared to an industry average of 25.03x. These figures suggest that the IPO is reasonably priced, particularly when considering the company's Return on Capital Employed (ROCE) of 41.72% and Return on Equity (RoE) of 39.39% for FY24.

Deepak Builders & Engineers IPO Review

As a leading construction company, Deepak Builders has completed 60 major infrastructure projects, including flyovers, rail bridges, stadiums, and residential complexes. With over nine EPC projects and numerous other government and private contracts under its belt, the company’s experience and track record are noteworthy.

The financial performance and valuation metrics reflect a company that has steadily grown its top-line and bottom-line figures over the past few years. Despite this, investors should carefully evaluate the broader market conditions and consider their risk tolerance before committing to this IPO.

While the Grey Market Premium suggests a potential listing gain, Deepak Builders & Engineers IPO may not be the best option for those looking for quick profits. The company’s medium-to-long-term prospects, particularly in the infrastructure sector, appear promising, but short-term investors may want to proceed with caution.

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