DEE Development IPO subscribed 56 times on Day 3 so far; HNI portion booked 110x

The initial public offering (IPO) of DEE Development Engineers continued to see a strong response from the investors during the third and final day of the bidding process. The bidding was joined by institutional bidders, while the first two days were led by HNI and retail investors of the issue.

 

The Faridabad-based DEE Development Engineers is selling its shares in the price band of Rs 193-203 apiece. Investors can apply for a minimum of 73 and its multiples thereafter. It is looking to raise Rs 418.01 crore via IPO, which includes a fresh share sale of Rs 325 crore and an offer-for-sale (OFS) of 45.82 lakh equity shares.

 

According to the data, the investors made bids for 83,02,31,044 equity shares, or 55.55 times, compared to the 1,49,44,944 equity shares offered for the subscription by 2.50 pm on Friday, June 21. The three-day bidding for the issue, which opened on Wednesday, June 19, concludes today.

 

The allocation for non-institutional investors was subscribed 109.05 times, while the portion reserved for qualified institutional bidders (QIBs) saw a subscription of 81.97 times. However, the quota set aside for retail investors was booked 17.94 times, while the employee portion was booked 34.57 times as of the time.

 

Founded in 1988, DEE Development Engineers is an engineering company that provides specialized process piping solutions for oil and gas, power including nuclear, chemicals, and other process industries through engineering, procurement, and manufacturing, among others.

 

The grey market premium of DEE Development has remained firm on a back of strong interest from the investors during the bidding so far. Last heard, the company was commanding a premium of Rs 95-100 in the unofficial market, suggesting a listing pop of about 50 per cent for the investors.

 

Brokerage firms are mostly positive on the issue suggesting investors to subscribe to it on the back of entry barriers in the industry, niche product segment, experienced management and robust growth potential. However, they see a small order book, big debt and aggressive pricing for the issue as key concerns for the issue.

 

DEE Development is a leading player in an industry with significant barriers to entry .Company is the largest player in process piping solutions in India, in terms of installed capacity, providing specialized process piping solutions with strategically located manufacturing facilities, said Hem Securities.

 

"The company has long standing customer relationships with a strong order book & wide range of specialized product offerings and services making the company a comprehensive solution provider. Company has a strong focus on automation and process excellence with an experienced engineering team to drive operational efficiencies," it added with a 'subscribe' rating in the IPO.

 

Dee Development Engineers mobilised Rs 125.1 crore from anchor investors as it has allotted 61.63 lakh equity shares to 19 funds at Rs 203 apiece. It  reported a net profit of Rs 14.34 crore with a revenue of Rs 380.23 crore for the nine months ended on December 31, 2023. The company's net profit came in at Rs 12.97 crore with a revenue of Rs 614.32 crore for the FY23.

 

Based on annualized FY24 earnings to post-IPO paid-up equity, the issue is priced at a P/E of 73 times. Thus the issue appears to be fairly priced compared to peers. DEE Development, a leading player in process piping solutions, emphasizes automation and operational excellence, said GEPL Capital with a 'subscribe' rating for the issue.

 

"Backed by a seasoned management team and a focus on high-margin products and partnerships with global OEMs, DEE aims to solidify its position as a preferred partner for clients. The Indian pipe process industry is set to grow at a 6.1 per cent CAGR by F30, driven by sectors like Oil and Gas, Chemicals/Petrochemicals, and renewable energy sources. DEE is well poised to capitalize on this growth," it said.

 

DEE Development has reserved shares worth Rs 1 crore for the eligible employees of the company, who will get a discount of Rs 19 per share. It has reserved 50 per cent of the issue for the qualified institutional bidders (QIBs), while non-institutional investors have 15 per cent of the net offer.  Remaining 35 per cent of the net offer shall be allocated towards retail investors.

 

Equirus Capital and SBI Capital Markets are the book running lead managers of the DEE Piping Systems IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with June 26, Wednesday as the tentative date of listing.

 

 

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