The initial public offering (IPO) of Deepak Builders & Engineers India continued to see a solid response from the investors during the second day of the bidding process. The issue, which kicked-off for bidding on Monday, October 21, was overall booked more than 4 times on Day one.
New Delhi-based Deepak Builders & Engineers is selling its shares in the price band of Rs 192-203 apiece. Investors can apply for a minimum of 73 shares and its multiples thereafter. It is looking to raise Rs 260 crore via IPO, which includes a fresh share sale of Rs 217.21 crore and an offer-for-sale (OFS) of up to 21.10 lakh equity shares.
According to the data from BSE, the investors made bids for 7,94,05,312 equity shares, or 8.86 times, compared to the 89,67,061 equity shares offered for the subscription by 2.35 pm on Tuesday, October 22. The three-day bidding for the issue will conclude on October, October 23.
The allocation for retail investors was subscribed 12.56 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 11.31 times. However, the quota set aside for qualified institutional bidders (QIBs) quota saw bids only 53 per cent for their allocations as of the same time.
Deepak Builders & Engineers India, incorporated in September 2017, is a construction company specializing in administrative, institutional, and industrial buildings, hospitals, stadiums, residential complexes, and other construction activities. Its business can be categorized into construction projects; infrastructure projects business; and sale of products.
The grey market premium (GMP) for Deepak Builders & Engineers India has been inching higher in making on the back of strong demand. Last heard, the company was commanding a premium of Rs 60-62 in the unofficial market, suggesting a listing pop of more than 30 per cent for the investors.
Brokerages have a positive view on the issue and suggest subscribing for a long term on the back of rising market demand, governments push on infra, strong order book and robust growth potential. However, dependence on government for orders, delays in projects, revenue from select clients and geographical concentration are the major risks for the company.
Deepak Builders & Engineers India has positioned itself as a trusted partner for large-scale infrastructure and construction projects, focusing on quality, advanced technology, and a skilled workforce. They offer EPC services on a fixed-sum turnkey basis as well as item-rate/percentage-based contracts, said Canara Bank Securities.
"Deepak Builders stands out as a trusted partner in large-scale infrastructure, boasting a robust order book and a proven track record in diverse projects. While it presents significant growth potential, investors should also be mindful of the associated risks. We recommend 'subscribe' to this issue for long-term gains," it said.
Deepak Builders & Engineers reported a net profit of Rs 14.21 crore with a revenue of Rs 106.34 crore for the quarter ended June 30, 2024. The EPC player clocked a net profit of Rs 60.41 crore with a revenue of Rs 516.74 crore for the financial year ended on March 31, 2024.
Ahead of its IPO, Deepak Builders raised Rs 78.01 crore from five anchor investors by allocating them 8,42,939 at Rs 203 apiece. Deepak Builders & Engineers India has reserved 50 per cent of the net offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) have 15 per cent of the allocation. Retail investors will get the remaining 35 per cent.
Deepak Builders is poised for significant growth in India's construction industry. The company has demonstrated impressive financial performance, with revenue from operations rising Rs 511.4 crore in FY24, achieving a CAGR of 18.69 per cent. PAT surged to Rs 60.41 crore in the same period, reflecting a CAGR of 84.93 per cent, said SMIFS.
"With an order book valued at Rs 1,380.39 crore as of June 30, 2024, including 12 diverse construction and infra projects, it is well positioned to capitalize on ongoing government initiatives like Gati Shakti and Bharatmala We recommend subscribe to the issue as a good long term investment as DBL should benefit from a strong order book and increasing margins," it said.
Fedex Securities is sole book running lead manager of the Deepak Builders & Engineers IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with Monday, October 28 as the tentative date of listing.