Deepak Builders & Engineers Ltd. made its stock market debut on the BSE and NSE today, October 28, 2024, following its ₹260.04 crore initial public offering (IPO), which was oversubscribed by 41.54 times. Despite strong demand during the subscription phase, the company’s shares listed at ₹200, reflecting the cautious sentiment among market participants due to a sharp drop in the grey market premium (GMP). The GMP had fallen to ₹32 from an earlier premium of ₹50 per share 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 significant oversubscription from NIIs underscores the strong interest in the IPO despite the fluctuations in GMP. Additionally, Deepak Builders raised ₹78 crore from institutional investors through its anchor book.
Use of IPO Proceeds:
- ₹95 crore for working capital requirements
- ₹30 crore for debt repayment
- The remaining proceeds for general corporate purposes
About Deepak Builders: Founded in 2017, Deepak Builders operates across three key verticals:
- Construction project business
- Infrastructure project business
- Sale of construction-related products
The company currently 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 sector.
Financial Performance: For FY24, Deepak Builders reported revenue of ₹511 crore, up from ₹433 crore in FY23, with net profit after tax more than doubling to ₹60.4 crore.
Outlook: Despite the decline in GMP, analysts remain positive on the company’s long-term potential, recommending the stock based on fair valuations and growth prospects in the infrastructure sector. Investors will be closely watching the stock’s performance following the listing as Deepak Builders continues to expand its footprint in the construction and infrastructure space.
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