Deepak Builders and Engineers IPO

Upcoming Deepak Builders & Engineers IPO: Price Band, Issue Size

Deepak Builders & Engineers IPO: Pin-to-Pin Explanation

Introduction: Deepak Builders & Engineers India Limited, an engineering and construction company, is launching its maiden IPO (Initial Public Offering) to raise ₹260.04 crore. The IPO will be open for subscription from October 21 to October 23, 2024. This IPO involves both a fresh issue and an offer-for-sale (OFS), and investors can participate in it through the book-building process. Below is a detailed breakdown of the key aspects of the IPO.

1. Issue Size, Lot Size & Price Band

• Issue Size:
  • Total size: ₹260.04 crore.
  • Fresh issue: 1.07 crore shares worth ₹217.21 crore.
  • Offer-for-sale (OFS): 21 lakh shares valued at ₹42.83 crore.
• Price Band:
  • Set at ₹192 to ₹203 per share.
• Lot Size:
  • Retail Investors: Minimum of 73 shares (investment of ₹14,819).
  • Small Non-Institutional Investors (sNII): Minimum of 14 lots (1,022 shares, investment of ₹2,07,466).
  • Big Non-Institutional Investors (bNII): Minimum of 68 lots (4,964 shares, investment of ₹10,07,692).

2. Subscription & Listing Dates

• Subscription Period: October 21 to October 23, 2024.
• Allotment Finalization: October 24, 2024.
• Refunds for Unsuccessful Bidders: October 25, 2024.
• Demat Account Share Credit: October 25, 2024.
• Listing Date: Tentatively October 28, 2024, on NSE and BSE.

3. Key Financials

• Quarter Ended June 2024:
  • Revenue: ₹106.34 crore.
  • Profit-after-Tax (PAT): ₹14.21 crore.
  • Net Worth: ₹155.81 crore.
• FY24 Financials:
  • Revenue Growth: ₹516.74 crore, an 18% increase over FY23.
  • PAT Growth: ₹60.41 crore (182% growth from FY23’s ₹21.4 crore).
  • Net Worth: ₹141.25 crore (58% growth over FY23).

4. Business Model

• Core Areas: The company engages in engineering, procurement, and construction (EPC) services, focusing on constructing hospitals, administrative buildings, flyovers, bridges, and residential complexes. Their operations span sectors such as healthcare, logistics, commercial, and residential.
• Geographic Focus: Mainly active in states like Punjab, Haryana, Rajasthan, Uttarakhand, and regions such as Chandigarh and the National Capital Territory of Delhi.
• Project Types: Projects are executed on fixed-sum turnkey, item-rate, or percentage basis contracts.

5. Key Strengths

• Urbanization & Infrastructure Boom: The company stands to benefit from increased urbanization and government initiatives in infrastructure development.
• Sectoral Flexibility: Capable of operating in various sectors, including healthcare, commercial, logistics, and residential.
• Strong Industry Relationships: Well-established connections with government agencies, architects, and other key stakeholders, which provide a competitive edge in winning new projects.
• Experienced Leadership: Deepak Builders is led by Deepak Kumar Singal, who has 30 years of experience and a record of completing over 60 infrastructure projects.

6. Risks & Threats

• Geographical Concentration: The company’s major projects are concentrated in Punjab, which may expose it to regional policy risks.
• Capital Accessibility: The company’s access to capital may depend on its credit rating, which could hinder its ability to raise funds at competitive rates.
• Project Delays: Ongoing projects are vulnerable to delays, modifications, or cancellations due to factors beyond the company’s control.

Advantages of Investing in Deepak Builders & Engineers IPO:

1. Sector Growth Potential: With infrastructure development being a key focus of the Indian government, Deepak Builders is positioned to benefit from strong industry demand.
2. Revenue and Profit Growth: The company has exhibited significant revenue and profit growth in the past financial year.
3. Diversified Portfolio: Deepak Builders handles a wide range of projects across sectors such as healthcare, logistics, and commercial spaces, reducing reliance on any one industry.
4. Experienced Leadership: The company’s leadership has vast experience in the construction industry, ensuring credibility and expertise in project execution.
5. Well-Established Relationships: Strong relationships with government entities, architects, and contractors may facilitate future project wins and business growth.

Disadvantages of Investing in Deepak Builders & Engineers IPO:

1. Geographical Dependency: A large proportion of projects are based in Punjab, making the company vulnerable to regional economic and policy changes.
2. Risk of Project Delays: Ongoing and future projects are susceptible to delays or cancellations, which could impact profitability.
3. Capital Access Issues: A poor credit rating may hamper the company’s ability to raise capital at competitive rates, potentially affecting its ability to scale or finance new projects.
4. Limited Brand Awareness: As a relatively new player (incorporated in 2017), the company may not have the brand recognition of some of its more established competitors.

Conclusion:

Deepak Builders & Engineers IPO presents a promising opportunity for investors looking to benefit from India’s infrastructure growth. With strong financial performance, experienced leadership, and a diversified project portfolio, the company is well-positioned in the construction sector. However, risks related to geographical concentration and project delays should be carefully considered by potential investors.

FAQs

1. What is the price band for Deepak Builders & Engineers IPO?
   • The price band has been set between ₹192 and ₹203 per share.
2. When is the subscription window for the IPO?
   • The subscription window will be open from October 21 to October 23, 2024.
3. What is the issue size of the Deepak Builders IPO?
   • The total issue size is ₹260.04 crore, which includes a fresh issue of ₹217.21 crore and an offer-for-sale (OFS) worth ₹42.83 crore.
4. What is the minimum investment required for retail investors?
   • Retail investors need to bid for a minimum lot of 73 shares, amounting to ₹14,819.
5. What are the key risks involved in the IPO?
   • Key risks include geographical concentration in Punjab, potential project delays, and challenges in accessing capital at favorable rates.

Deepak Builders and Engineers IPO

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