Deepak Builders & Engineers IPO Day 2: GMP, subscription status; Should you apply?

Deepak Builders & Engineers IPO: The initial public offering (IPO) of Deepak Builders & Engineers is witnessing strong subscriptions from the retail and non-institutional investors (NIIs) segment. The ₹260.04 crore book-built issue opened for subscription on Monday, October 21, and will remain so till Wednesday, October 23. The IPO has a price band fixed at ₹192 to ₹203 per share.

The issue, which is a combination of a fresh issue of 1.07 crore shares to raise ₹217.21 crore and an offer for sale (OFS) of 21 lakh shares to raise ₹42.83 crore, intends to use the net proceeds to pay debt, fund working capital requirements and for general corporate purposes.

KFin Technologies Limited has been appointed the official registrar of the book build issue, while Fedex Securities has been appointed lead manager of the public offer.

Deepak Builders & Engineers IPO GMP

According to market sources, the last grey market premium (GMP) of the stock was ₹61 and considering the upper price band of the issue of ₹203, the estimated listing price of the stock is ₹264, a premium of 30.05 per cent.

Deepak Builders & Engineers IPO subscription status

According to BSE data, by 12:30 pm on the second day of subscription on Tuesday, the issue had been subscribed 7.46 times, receiving bids for 6,69,24,648 shares against 89,67,061 offered.

The segment reserved for retail investors was subscribed 10.80 times, with bids for 4,84,24,185 shares against 44,83,500 offered, while the NII segment was booked 8.93 times, with bids for 1,71,59,453 shares against 19,21,500 offered.

The QIB segment was subscribed 0.52 times, receiving bids for 13,41,010 shares against 25,62,061 offered.

Deepak Builders & Engineers IPO key details

The public issue, priced at ₹192 to ₹203 per equity share, will remain open until Wednesday this week. A bidder can apply in lots, and one lot of the book build issue comprises 73 company shares.

The company is expected to finalise share allotment on Thursday, October 24, and successful bidders may expect shares into their demat accounts on Friday, October 25. The stock may debut on the BSE and NSE on Monday, October 28.

Deepak Builders & Engineers India Limited specialises in constructing administrative, institutional, and industrial buildings, hospitals, stadiums, residential complexes, and other construction projects.

Should you apply?

Experts underscored Deepak Builders & Engineers India is well-positioned to benefit from the growth in urbanisation and economic expansion to increase the demand for efficient transport networks.

They highlight that due to government initiatives like the Gati Shakti National Master Plan and the Bharatmala Pariyojana, India's construction industry is set to grow significantly, projected to reach $1.4 trillion by 2025.

Sectors, such as residential, commercial, industrial, and infrastructure construction, are expected to drive job creation and economic activity.

Deepak Builders & Engineers India's growth outlook looks bright, and it has a strong order book.

"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," said Akriti Mehrotra, a research analyst at StoxBox,

Mehrotra recommends subscribing to the issue from a medium—to long-term investment perspective.

"The current issue is priced at a P/E of 12.1 times on the upper band based on FY24 earnings and is relatively lower than peers. Deepak Builders is well-positioned for future expansion with a proven track record of 76 completed projects and Class I (Super) Contractor accreditation," said Mehrotra.

"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 per cent during the FY22-24 period, reaching ₹5,114 million in revenue and ₹1,122 million in EBITDA in FY24," Mehrotra said.

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