| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 192 to ₹ 203 | 73 | 21st Oct, 2024 – 23rd Oct, 2024 | ₹ 260.04Cr |
About Deepak Builders & Engineers India Ltd IPO
Deepak Builders & Engineers India Limited is a construction company established in 2017, classified into three verticals: construction project business, infrastructure project business and the sale of products. The construction project business specializes in executing and constructing diverse infrastructure and building projects, including hospitals, medical colleges, administrative and institutional buildings, industrial complexes, historical memorials, sports facilities, and residential projects. The infrastructure project business undertakes specialized work such as flyovers, rail under and over-bridges, and railway station redevelopment. The company operates across northern India, including Punjab, Haryana, Rajasthan, Uttarakhand, and Union Territories like Delhi and Chandigarh. The company offers a comprehensive suite of services, including EPC (Engineering, Procurement, and Construction) and item-rate/percentage-rate contracts. Its projects encompass architectural, civil, structural, mechanical, electrical, and plumbing (MEP) works, along with specialized systems like modular operation theatres and medical gas pipelines. With a robust portfolio, the company has completed major projects such as the Jang-E-Azadi Memorial in Kartarpur and the AIIMS Geriatrics Block in New Delhi. In addition to its construction activities, the company has established Ready-Mix Concrete (RMC) plants and stocks materials such as steel, cement, and aggregates to execute projects efficiently. Surplus materials, primarily steel, are sold to third-party contractors and traders at competitive prices. Since its incorporation, the company has shown steady growth, achieving a revenue from operations of Rs. 5,114 million in FY24, up from Rs. 3,630.5 million in FY22. As of June 2024, the company’s order book stood at Rs. 13,803.9 million, indicating a strong pipeline of future work. It is pre-qualified to bid for projects up to Rs. 6,500 million and holds a Class I (Super) Contractor accreditation from the Central Public Works Department. The company’s diverse portfolio, operational expertise, and growing market presence position it as a significant player in India’s construction and infrastructure sector.
Objective of the Deepak Builders & Engineers India Ltd IPO
The company proposes to utilize the net proceeds from the fresh issue towards funding the following objects:
- Repayment/prepayment, in full or part, of certain borrowings availed by the company;
- Funding of working capital requirements of the company and
- General corporate purposes.
Rationale To Invest In Deepak Builders & Engineers India Ltd IPO
Decent order book with a government client base drives growth potential
Deepak Builders & Engineers India Limited has established itself as a reliable partner for large-scale infrastructure and building projects thanks to its focus on high-quality construction, advanced technology, and a skilled workforce. The company’s strong client base, consisting of government, semi-government, and government-controlled entities, provides stability and visibility for future revenues, enabling repeat contracts and long-term growth. As of June 2024, its order book stood at Rs. 13,803.9 million, underscoring a robust pipeline of future projects. The company has proven its capabilities with 76 completed construction and infrastructure projects, including major hospitals, industrial complexes, and public infrastructure. Its Class I (Super) Contractor status further highlights its ability to independently bid for projects up to Rs. 6,500 million, positioning it well for large-scale government projects. Deepak Builders’ competitive advantage lies in its selective project bidding, financial strength, timely execution, and price competitiveness. These factors allow the company to secure contracts from governmental and public sector bodies while optimizing working capital and resource utilization. With India’s economic growth, rapid urbanization, and increasing infrastructure demands, Deepak Builders is well-positioned for sustained success. Strong relationships with key stakeholders and its ability to adapt to market demands further bolster its growth prospects, making it an attractive investment opportunity.
Continuous focus on equipment ownership
Deepak Builders & Engineers India Limited’s strategic ownership of 398 major construction machines as of June 2024 provides a distinct competitive edge in project execution, reducing dependency on external providers and minimizing equipment downtime and maintenance costs. This extensive fleet, including concrete mixers, JCBs, transit mixers, and mobile tower cranes, is critical for timely delivery and the ability to bid for new projects. The company’s continuous investment in modern equipment ensures operational efficiency and enhances its capacity to undertake complex, large-scale projects. With a gross block value of Rs. 742.6 million in property, plant, and equipment, of which Rs. 474.2 million is dedicated to plant and machinery, Deepak Builders has demonstrated consistent investment in its asset base, underscoring its commitment to maintaining a competitive and scalable operation. These factors, combined with its strong order book and market positioning, make Deepak Builders a compelling investment opportunity poised for continued growth in India’s expanding infrastructure sector.
Valuation of Deepak Builders & Engineers India Ltd IPO
India’s construction industry is set to grow significantly, projected to reach USD 1.4 trillion by 2025, fueled by initiatives like the Gati Shakti National Master Plan and the Bharatmala Pariyojana, which enhance connectivity and infrastructure. Key sectors, including residential, commercial, industrial, and infrastructure construction, are expected to drive job creation and economic activity. Rapid population growth, urbanization, and economic expansion increase the demand for efficient transport networks, further emphasized by a rise in trade and government investments. Deepak Builders & Engineers India Limited is strategically positioned for this growth, boasting a robust order book of Rs. 13,803.9 million and generating 92% of its FY24 revenue from government and semi-government projects. The company aims to enhance project execution through in-house integration and improved bid capacities, supported by a fleet of 398 major construction machines. Financially, the company has shown strong growth, with a CAGR of 18% during the FY22-24 period, reaching Rs. 5,114 million in revenue and Rs. 1,122 million in EBITDA in FY24. However, the company faces risks, particularly its dependence on government contracts and an ongoing tax dispute. To mitigate these risks, Deepak Builders plans to solidify its presence in Northern India while expanding into new geographies, focusing on government projects and enhancing its bidding and execution capabilities. By leveraging its in-house integration for design, engineering, and project management, the company aims to increase efficiency and reduce reliance on third-party contractors, targeting larger contracts, including major NHAI road and airport construction projects. The current issue is priced at a P/E of 12.1x on the upper band based on FY24 earnings and is relatively lower than peers. With a proven track record of 76 completed projects and Class I (Super) Contractor accreditation, Deepak Builders is well-positioned for future expansion. Therefore, we recommend a “SUBSCRIBE” rating for the issue, with a medium to long-term investment perspective.
What is the Deepak Builders & Engineers India Ltd IPO?
Deepak Builders & Engineers IPO is a book built issue of Rs 260.04 crores. The issue is a combination of fresh issue of 1.07 crore shares aggregating to Rs 217.21 crores and offer for sale of 0.21 crore shares aggregating to Rs 42.83 crores. Login to your account now.
How to apply for the Deepak Builders & Engineers India Ltd IPO through StoxBox?
To apply for the Deepak Builders & Engineers India Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Deepak Builders & Engineers India Ltd IPO open?
Deepak Builders & Engineers India Ltd IPO is opening on 21st October 2024. Apply Now
What is the lot size of the Deepak Builders & Engineers India Ltd IPO?
The Lot Size of Deepak Builders & Engineers India Ltd IPO is 73 equity shares. Login to your account now
When is the Deepak Builders & Engineers India Ltd IPO allotment date?
The allotment Date for Deepak Builders & Engineers India Ltd IPO is 24th October 2024. Login to your account now.
When is the Deepak Builders & Engineers India Ltd IPO listing date?
The listing Date for Deepak Builders & Engineers India Ltd IPO is 28th October 2024. Login to your account now
What is the minimum investment required for the Deepak Builders & Engineers India Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,819. Login to your account now
What is the maximum investment allowed for the Deepak Builders & Engineers India Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 192,647. Login to your account now
What are the risks associated with investing in the Deepak Builders & Engineers India Ltd IPO?
- The company heavily relies on government projects, making it vulnerable to changes in government policies. Revenue from government, semi-government, and government-related entities accounted for 92% in FY24, highlighting this dependence. Any changes in government policies or contract terms could impact the company’s financial stability.
- The company relies heavily on a few large projects that contribute Rs. 13,803.9 million to its overall revenue, making it vulnerable to delays and cost overruns; any issues with these projects could negatively impact the company’s finances.
- The Income Tax Department conducted a search operation under section 132(1) of the Income Tax Act at the company’s premises, resulting in the declaration of Rs.156.7 million as undisclosed income. This raised a penalty, which the company is currently challenging through appeals before the High Court. There is no assurance of a favourable outcome, and any future actions by tax authorities could materially impact the company’s financial condition and cash flows.
When will the Deepak Builders & Engineers India Ltd IPO shares be credited to my Demat account?
The Deepak Builders & Engineers India Ltd IPO be credited to the account on allotment date which is 25th October 2024. Login to your account now
Where can I find the Deepak Builders & Engineers India Ltd IPO prospectus?
The prospectus of Deepak Builders & Engineers India Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Deepak Builders & Engineers India Ltd IPO?
| IPO Open Date | Monday, October 21, 2024 |
| IPO Close Date | Wednesday, October 23, 2024 |
| Basis of Allotment | Thursday, October 24, 2024 |
| Initiation of Refunds | Friday, October 25, 2024 |
| Credit of Shares to Demat | Friday, October 25, 2024 |
| Listing Date | Monday, October 28, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on October 23, 2024 |
