Deepak Builders & Engineers IPO: The initial public offering (IPO) of Deepak Builders & Engineers, which opened for subscription on Monday, October 21, is drawing strong interest from retail and non-institutional investors (NIIs). The ₹260.04 crore book-built issue is priced within a band of ₹192 to ₹203 per share. Today, Wednesday, October 23, marks the final day for investors to subscribe to the offering.
The issue combines a fresh issue of 1.07 crore shares and an offer for sale (OFS) of 21 lakh shares. The company intends to use the net proceeds to pay debt, fund working capital requirements, and 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.
According to market sources, the last grey market premium (GMP) of the stock was ₹62. Considering the upper price band of the issue of ₹203, the estimated listing price of the stock is ₹265, a premium of 30.54 per cent.
According to BSE data, by 11:30 am on the third day of subscription on Wednesday, the issue had been subscribed 18.10 times, receiving bids for 16,23,47,547 shares against 89,67,061 offered.
The segment reserved for retail investors was subscribed 22 times, with bids for 9,86,35,264 shares against 44,83,500 offered, while the NII segment was booked 31.67 times, with bids for 6,08,50,683 shares against 19,21,500 offered.
The QIB segment was subscribed 1.12 times, receiving bids for 28,61,600 shares against 25,62,061 offered.
The IPO will remain open for subscription till 5 pm today. Bidders can apply in lots, and one lot of the book build issue comprises 73 company shares.
Share allotment is expected to be finalised 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.
Experts and brokerage firms appear positive about the issue due to the company's growth prospects in a rapidly growing sector.
Brokerage firm SMIFS Limited has a "subscribe" recommendation on the issue as it believes the company is poised for significant growth in India's construction industry, projected to reach $1.4 trillion by 2025.
SMIFS highlighted that the company's proactive plan to reduce debt by ₹300 million will enhance its financial stability, decrease interest expenses, and positively impact the bottom line.
"This strategic focus on a robust balance sheet and diversified project portfolio
underscores Deepak Builders & Engineers's commitment to sustainable growth. We recommend subscribing to the issue as a good long-term investment as the company should benefit from a strong order book, and increasing margins should aid decent growth being made available at fair valuations, leaving scope for appreciation though the company is relatively small compared to its peers," said SMIFS.
Akriti Mehrotra, a research analyst at StoxBox, also 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.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
