Deepak Builders & Engineers IPO: Key Risks and GMP Insights Before Subscribing to the ₹260 Crore Offering

The IPO of Deepak Builders & Engineers India opened for subscription on Monday, October 21, and will stay open until Wednesday, October 23. The company is aiming to raise ₹260.04 crore through this public offering. The price range for the shares is set between ₹192 and ₹203 each.

On the first day of subscription, by 10:30 AM, the IPO had received a fair response. It was subscribed 0.36 times overall, with the retail portion subscribed 0.60 times and non-institutional investors (NIIs) subscribing 0.29 times.

Key IPO Details:

• Share Allotment: Likely to be finalized on Thursday, October 24.
• Demat Credit: Shares are expected to be credited to successful applicants’ demat accounts on Friday, October 25.
• Listing Date: The stock could debut on the BSE and NSE on Monday, October 28.
• GMP (Grey Market Premium): The stock’s GMP is ₹60. With the upper price band set at ₹203, the estimated listing price is ₹263, a 29.56% premium.

10 Key Risks Investors Should Know:

1. Government Dependence: The majority of the company’s revenue comes from contracts with government and semi-government entities. Changes in government policies or contracts being altered or canceled could negatively impact the company’s business and operations.
2. Concentration of Projects: The company is involved in a few large-scale projects, mostly in Punjab. Any issues or delays with these projects, or changes in the political and economic climate in Punjab, could hurt the company’s financial performance.
3. Project Delays: The company’s ongoing projects are exposed to risks such as delays or cancellations, which could affect its operations and financial health.
4. Negative Cash Flows: In the past, the company has faced negative cash flows from its business activities. This could continue in the future, affecting its ability to operate profitably.
5. Limited Client Base: A significant portion of the company’s revenue comes from a small number of clients. Losing any of these clients could negatively affect the company’s financial position and business prospects.
6. Competitive Industry: The construction industry has low entry barriers, making it highly competitive. The company may struggle to stay competitive, which could impact its business and finances.
7. High Working Capital Needs: The company’s business requires significant working capital, with long project timelines. If it cannot generate enough cash flow for debt payments or to fund ongoing projects, its operations could be affected.
8. Promoter Share Pledge: The company’s promoters, Deepak Singal and Sunita Singal, have pledged some of their shares. If the company defaults, these pledged shares could be enforced, creating risks for investors.
9. Interest Rate Risks: Fluctuations in interest rates could reduce the profitability of the company’s projects and negatively impact its business and financial position.
10. Regulatory Risks: The company mentioned past non-compliance with certain corporate actions, which could result in penalties or regulatory action.

These risks highlight the importance of considering the potential downsides before investing in Deepak Builders & Engineers’ IPO.