IPO listed on 28 Oct'24
Deepak Builders Engineers India Ltd
Minimum Investment
₹ 14,819 / 73 shares
Grey market premium
₹ 32 (16% premium)
Issue price
₹ 203
Listing price
₹ 200
Listing gains
-3 (-1%)
Listing on
Oct 28, 2024
Our Verdict:
Neutral
- Deepak Builders Engineers India Ltd (DBEIL) has shown strong growth over the past three years. However, its long-term stability faces challenges, including a high reliance on government contracts, geographic concentration, and operating in an intensely competitive industry, along with other risks outlined below.
- In terms of valuations, the IPO seems reasonably priced with a price-to-earnings (P/E) ratio of 12x based on FY24 earnings. Additionally, the grey market premium (GMP) for the issue suggests a positive listing on the bourses.
- Long-term investors, however, should keep this stock on their radar and monitor the company's performance over the next two quarters before making investment commitments.
About the company
Founded in
11 Sep'17
Managing director
Deepak Singal
- DBEIL is an integrated engineering and construction firm with expertise in building and executing a wide range of projects, including administrative and institutional buildings, hospitals, medical colleges, industrial facilities, stadiums, sports and residential complexes, and various developmental and construction activities.
- The firm also specializes in structural work such as flyovers, rail underbridges, rail overbridges, approach roads, and the development and redevelopment of railway stations. Additionally, it manages operations and maintenance as per its contractual obligations for various projects.
STRENGTHS
- Impressive Financial Growth: DBEIL has demonstrated significant growth, with its operational revenue and net profit achieving compounded annual growth rates (CAGRs) of 19% and 85%, respectively, from FY22 to FY24.
- Solid Return Ratios: DBEIL's financial performance is marked by strong return metrics, with a Return on Equity (RoE) of 39.39% and a Return on Capital Employed (RoCE) of 41.72% in FY24.
- Increasing Profitability: Over recent years, DBEIL has consistently improved its EBITDA and Net Profit margins, which stood at 22.98% and 11.81%, respectively, as of March 31, 2024.
- Strong Order Book: As of June 30, 2024, DBEIL held a solid order book with 12 construction and infrastructure projects totalling Rs 1,380 crore, ensuring significant revenue visibility.
RISK FACTORS
- Geographic Concentration: DBEIL's project portfolio has historically been concentrated in the states of Punjab and Haryana, with projects from these regions contributing approximately 80% of the company's revenue in FY24.
- Cash Flow Concerns: DBEIL has experienced negative cash flows from operating activities in the past. Continued negative cash flows could negatively affect its liquidity needs and overall financial health.
- Project Dependence: Three ongoing projects account for ~76-77% of the order book as of the end of June 2024. Any delays in the execution of these projects could severely impact DBEIL’s operations.
- Tax-related Risks: In the past, DBEIL and its promoters have been subject to search operations by the Income Tax Department under section 132(1) of the Income-tax Act. Any adverse actions by tax authorities could result in increased tax liabilities.
- Pledged Promoter Stake: Approximately 11.89% of the promoter's post-issue stake is pledged, which may be enforced in the event of any default by the company.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 260.04 crore
Fresh Issue
₹ 217.21 crore
OFS
₹ 42.83 crore
Price range
₹ 192 - 203
Lot size
73 shares
Issue Objective
DBEIL intends to use the net proceeds from the fresh issue for the following purposes:
- Repayment or prepayment of certain loans;
- Funding its working capital requirements; and
- General corporate purposes.
Dates
Bidding open
21 Oct'24
Bidding close
23 Oct'24
Allotment date
24 Oct'24
Refund date
25 Oct'24
Listing
28 Oct'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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