Deepak Builders & Engineers IPO: 10 Key Things to Know Before Investing as Anchor Investors Line Up Ahead of October 21 Launch

Deepak Builders & Engineers India, an engineering and construction company, is preparing for its first share sale. The IPO will be open for subscription from Monday, October 21, to Wednesday, October 23. Anchor investors will receive their allocation on Friday, October 18.

The Punjab-based company has set the price range for its ₹260-crore IPO at ₹192-203 per share, with each share having a face value of ₹10.

This IPO includes the sale of 10.7 million new equity shares, along with 2.11 million shares being sold by the company’s current owners through an offer-for-sale (OFS).

The majority owners, Deepak Kumar Singal and his wife, are offering shares in the OFS. They currently hold almost 100% of the company’s shares.

IPO Details

Fedex Securities Pvt Ltd is managing the IPO, and Kfin Technologies Ltd is handling the registrar duties. In this public issue, 50% of the shares are reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and 35% for retail investors.

10 Key Things to Know from the RHP Before You Invest:

1. Promoters
Deepak Builders & Engineers’ promoters are Deepak Kumar Singal and Sunita Singal.

2. Promoters’ Shareholding
Currently, the promoters own almost 100% of the company.

3. Peer Comparison
The company’s main competitors, listed in the red herring prospectus (RHP), include IRCON International Ltd, which has a P/E ratio of 24.67, Ahluwalia Contracts (India) Ltd with a P/E ratio of 19.25, PSP Projects Ltd with a P/E ratio of 19.16, and ITD Cementation Ltd, which has a P/E ratio of 37.04.

4. Business Overview
Deepak Builders & Engineers is known for building administrative, institutional, and industrial projects, including hospitals, stadiums, and residential complexes. The company offers full turnkey project solutions, including architectural, structural, civil, and mechanical works, along with services like firefighting systems and IT infrastructure.

5. Ongoing Projects
Currently, the company is handling 12 active projects, which include 7 EPC projects and 5 contracts. These projects range from hospitals and medical colleges to railway station upgrades and road and bridge construction.

6. Clients
Some of the company’s main clients include Northern Railways, PWD Punjab, PWD Haryana, PWD Uttarakhand, WAPCOS, IOCL, the Greater Mohali Area Development Authority, and the Punjab Heritage and Tourism Promotion Board.

7. Group Companies
The company’s only group entity is Deepak Singal Engineers and Builders Private Limited.

8. Financial Growth
In the last financial year, the company’s revenue grew by 19%, and its profit after tax (PAT) surged by 182%.

9. Order Book
As of June 30, 2024, Deepak Builders & Engineers had an order book worth ₹13,803.89 million, with 66.03% coming from railway projects and 25.05% from an industrial project for Indian Oil Corporation Ltd.

10. Key Risks
Some risks include:

• The company’s reliance on a few large projects, which could affect its financial health if issues arise.
• Its heavy focus on the Punjab region, making it vulnerable to changes in regional laws or politics.
• Previous negative cash flows from operating activities, which could impact future performance.

Anchor Investor Lock-in

Half of the shares allocated to anchor investors will be locked in for 90 days, and the other half will be locked in for 30 days from the date of allotment.