Desco Infratech Limited is one of the prominent names in India’s infrastructure development sector, specializing in sectors such as City Gas Distribution, Renewable Energy, Water, and Power. The company is known for tackling complex challenges and executing critical projects across India. Desco Infratech is set to raise ₹30.75 Crores through an IPO that will be launched on March 24, 2025 and close on March 26, 2025. The IPO comprises a fresh issue of 20.50 lakh shares at a price band of ₹147 to ₹150 per share.

The market capitalization of Desco Infratech at the upper price band of ₹150 per share is estimated to be ₹115.14 Crores. The lot size for the IPO is 1,000 shares, which means the minimum investment for retail investors will be ₹1,50,000 and for High-Net-Worth Individuals (HNIs), it will be ₹3,00,000 (for 2 lots). The subscription period will commence on March 24, 2025, and the shares are expected to be listed on the BSE SME on April 1, 2025.

IPO Subscription and Allotment Process

The IPO is being managed by Smart Horizon Capital Advisors Private Limited as the Book Running Lead Manager. BIGSHARE SERVICES PRIVATE LIMITED will act as the registrar for the IPO, and Rikhav Securities Limited will be the Market Maker. Investors can track the live subscription status on the BSE website and monitor the number of shares subscribed across various categories.

The IPO allotment is expected to be finalized on March 27, 2025, and investors can check their allotment status on the registrar’s website by entering details such as application number, PAN, or DP client ID.

Grey Market Premium (GMP)

Currently, the Grey Market Premium (GMP) for Desco Infratech IPO stands at ₹0, indicating no listing gain in the unorganized market at this time. The GMP is purely for informational purposes and depends on demand and supply dynamics. It should not be used as a sole indicator for investment decisions.

Financial Performance of Desco Infratech

For the period ended September 30, 2024, Desco Infratech reported revenues from operations of ₹2,274.50 Lakhs, showing a steady growth in business performance over the years. The EBITDA for the same period was ₹496.77 Lakhs, reflecting healthy profitability. The Profit after Tax (PAT) for FY24 stood at ₹338.07 Lakhs, signaling strong earnings. Key financial metrics include:

• Pre-issue EPS: ₹6.95

• Post-issue EPS: ₹4.50

• Pre-issue P/E ratio: 21.58x

• Post-issue P/E ratio: 33.30x

• Industry P/E ratio: 13x

• ROCE: 39.52%

• ROE: 40.61%

These numbers indicate the company’s strong operational efficiency and the IPO valuation appears fully priced. However, the premium valuation in relation to the industry suggests the IPO is priced higher than its peers.

Desco Infratech IPO Objectives

The net proceeds from the IPO will be utilized for various purposes:

1. ₹104.29 Lakhs for the corporate office setup in Surat, Gujarat.

2. ₹168.04 Lakhs for the purchase of machinery.

3. ₹1,800.00 Lakhs for working capital requirements.

4. Remaining funds for general corporate purposes.

Desco Infratech IPO Review

Desco Infratech, with its diversified expertise across multiple infrastructure sectors, is well-positioned for growth. However, the current GMP of ₹0 and the relatively high P/E ratio (compared to industry standards) indicate that the IPO might not offer significant listing gains in the near term. Based on these factors, we recommend investors exercise caution and avoid this IPO if their goal is to gain profits from short-term listing gains.

Given the company's growth trajectory and the leadership team’s experience, long-term investors may still find the company appealing, but short-term speculation might not yield positive returns.

Investors should keep track of live updates on subscription status and allotment status before making any final decisions regarding the Desco Infratech IPO.

The Upcoming IPOs in this week and coming weeks are Arisinfra Solutions Limited,Identixweb Limited,Retaggio Industries Limited,Infonative Solutions Limited.

The Current active IPO are ATC Energies System Limited, Shri Ahimsa Naturals Limited,Desco Infratech Limited,Rapid Fleet Management Services, Active Infrastructures Limited.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.