Deepak Builders & Engineers Ltd. is set to make its debut on the BSE and NSE on Monday, October 28, 2024, after its ₹260.04 crore initial public offering (IPO) was oversubscribed by 41.54 times. However, the grey market premium (GMP) for Deepak Builders’ shares has experienced a sharp drop, falling to ₹32 from an earlier premium of ₹50 per share, reflecting caution among market participants ahead of the listing.
IPO Subscription Breakdown:
- Non-Institutional Investors (NIIs): 82.47 times
- Retail Investors: 39.79 times
- Qualified Institutional Buyers (QIBs): 13.91 times
The strong demand from NIIs highlights significant interest, despite the volatility in GMP. Deepak Builders also raised ₹78 crore from institutional investors through its anchor book.
Use of IPO Proceeds:
The company plans to allocate the funds as follows:
- ₹95 crore for working capital requirements
- ₹30 crore for debt repayment
- Remaining for general corporate purposes
About Deepak Builders:
Established in 2017, Deepak Builders operates in three primary verticals: construction project business, infrastructure project business, and the sale of construction-related products. The company has 12 ongoing projects, including seven EPC projects and five item-rate contracts, with a total order book of ₹1,380 crore as of June 2024. Notably, 66% of its projects are focused on the railway segment.
Financial Performance:
For FY24, Deepak Builders reported a revenue of ₹511 crore, up from ₹433 crore in FY23, with net profit after tax more than doubling to ₹60.4 crore.
Outlook:
While the grey market premium has dipped, analysts have recommended subscribing to the IPO for the long term, citing fair valuations and growth potential in the infrastructure sector. Investors will closely watch how the stock performs upon listing, as the company continues to expand its footprint in the construction and infrastructure space.
