Desco Infratech, a leading infrastructure development company in India, made a strong debut on the BSE SME platform on April 1, 2025, with its shares listing at ₹160 per share. This represents a 6.67% premium over the issue price of ₹150 per share, which had been set for its initial public offering (IPO). The company is known for its expertise in areas such as City Gas Distribution, Renewable Energy, Water, and Power, making a significant impact on India's infrastructure development.

The IPO, which raised ₹30.75 Crores, was a Book Built Issue consisting entirely of a Fresh Issue of 20.50 Lakh shares. The subscription period for the IPO was from March 24 to March 26, 2025, and the allotment process was finalized on March 27, 2025. The final issue price was fixed at ₹150 per share, and the shares were allocated at the upper end of the price band, demonstrating confidence from both retail and institutional investors.

Desco Infratech IPO Details:

• IPO Price Band: ₹147 to ₹150 per share

• Lot Size: 1,000 shares

• Market Capitalization at ₹150/share: ₹115.14 Crores

• Retail Investment Requirement: ₹1,50,000 for one lot

• HNI Investment Requirement: ₹3,00,000 for two lots

• Lead Manager: Smart Horizon Capital Advisors Pvt. Ltd.

• Registrar: BIGSHARE SERVICES PRIVATE LIMITED

• Market Maker: Rikhav Securities Limited

Desco Infratech IPO Grey Market Premium (GMP):

The Grey Market Premium (GMP) for Desco Infratech's IPO was initially ₹0, reflecting minimal trading activity in the unorganized grey market. As a result, no real price discovery occurred through the GMP before the listing. Investors should be cautious about relying on GMP for making investment decisions.

Desco Infratech IPO Subscription Status:

By the close of subscription on March 26, 2025, the IPO saw a massive 77.74x oversubscription, underscoring investor confidence in Desco Infratech's growth potential. The strong demand for shares led to a significant premium listing on the BSE SME.

Objectives of the IPO:

The company plans to utilize the net proceeds from the IPO for the following purposes:

1. Capital Expenditure: ₹104.29 Lakhs will be used to establish a new corporate office in Surat, Gujarat.

2. Machinery Purchase: ₹168.04 Lakhs will be directed towards purchasing essential machinery.

3. Working Capital: ₹1,800.00 Lakhs will be allocated to support the company's working capital requirements.

4. General Corporate Purposes: The remaining funds will be used for general corporate needs.

Financial Performance:

Desco Infratech has shown steady growth in revenue, with its operations generating ₹2,274.50 Lakhs in revenue for the period ending September 30, 2024. For FY24, the company posted an EBITDA of ₹496.77 Lakhs and a Profit After Tax (PAT) of ₹338.07 Lakhs, further emphasizing its profitability. The company’s key financial metrics indicate a robust financial position, but the IPO's high P/E ratio (post-issue) suggests that it may be fully priced at the time of listing.

Desco Infratech IPO Review:

Despite the strong debut on the BSE SME, the IPO has been flagged with a relatively high post-issue P/E ratio of 33.30x compared to the industry average of 13x. While Desco Infratech has demonstrated consistent growth and profitability, the IPO appears to be fully priced, and the Grey Market Premium (GMP) trend indicates no immediate listing gains.

Given these factors, potential investors may want to approach this IPO with caution, especially if they are seeking short-term gains. The strong financials and sector expertise, however, make it a viable long-term investment for those interested in the infrastructure development space.

Final Thoughts:

With Desco Infratech listing at a premium, the company is clearly gaining attention in the infrastructure sector. However, the IPO's valuation and the absence of significant listing gains based on GMP suggest that investors should carefully assess their risk appetite before making any decisions.

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