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

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

The issuance, which is a combination of a new issuance of 1.07 million shares to increase $$217.21 crore and an offer for sale (OFS) of 21 lakh shares to raise $$42.83 crore, intends to use the net proceeds to repay debt, finance working capital requirements and for general corporate purposes.

KFin Technologies Limited was appointed official registrar for the book issue, while Fedex Securities was appointed lead manager for the public offering.

Deepak Builders and Engineers IPO GMP

According to market sources, the stock’s latest gray market premium (GMP) was $$61 and considering the upper price range for issuing $$203, the estimated listing price of the shares is $$264, a premium of 30.05 percent.

Deepak Builders & Engineers IPO Subscription Status

According to BSE data, as of 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 offers of 4,84,24,185 shares against 44,83,500 offered, while the NII segment was subscribed 8.93 times, with offers of 1,71,59,453 shares against 19,21,500 offers .

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

Deepak Builders & Engineers IPO Key Details

The public issue, at the price of $$192 to $$203 per share, will remain open until Wednesday this week. A bidder can apply in batches, and one batch of the book issue comprises 73 shares of the company.

The company is expected to finalize share allotment on Thursday, October 24, and successful bidders can expect shares in 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 specializes in the construction of administrative, institutional and industrial buildings, hospitals, stadiums, residential complexes and other construction projects.

Should you sign up?

Experts highlighted that Deepak Builders & Engineers India is well positioned to benefit from growing urbanization and economic expansion to increase demand for efficient transport networks.

They highlight that, due to government initiatives such as the Gati Shakti National Master Plan and the Bharatmala Pariyojana, India’s construction industry is expected to grow significantly, expected to reach $1.4 billion by 2025.

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

Deepak Builders & Engineers India’s growth prospects look good and it has a strong order book.

“Rapid population growth, urbanization and economic expansion increase the demand for efficient transportation networks, further emphasized by an increase in trade and government investment. Deepak Builders & Engineers India Limited is strategically positioned for this growth, boasting a robust order book of Rs. 13,803.9 crore and generating 92% of its FY24 revenue from government and semi-government projects,” said Akriti Mehrotra, research analyst at StoxBox,

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

“The current issue has a price-to-earnings ratio of 12.1 times in the upper range 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 Accreditation of (Super) Contractors,” Mehrotra said.

“The company aims to improve project execution through internal integration and improved bidding capabilities, supported by a fleet of 398 major construction machines. Financially, the company has delivered strong growth, with a CAGR of 18% during the period from fiscal year 22 to 24, achieving $$5,114 million in revenue and $$1,122 million in EBITDA in FY24,” Mehrotra said.

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