Is Deepak Builders & Engineers IPO Good or Bad
20 October 2024
8 min read
00:00 / 00:00
Deepak Builders & Engineers is kicking off its initial public offering which will be open from October 21, 2024, to October 23, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether the Deepak Builders & Engineers IPO is good or bad, whether it is worth investing in this IPO, and so on.
This article provides a comprehensive Deepak Builders & Engineers IPO review, diving into its business operations and fundamental analysis to help you make a well-informed investment decision.
Deepak Builders & Engineers IPO - Company Overview
Incorporated in 2017, Deepak Builders & Engineers is an integrated engineering and construction company, specializing in the execution and construction of administrative & institutional buildings, hospitals and medical colleges, industrial buildings, historical memorial complexes, stadium, and sports complexes, residential complexes and various developmental and other construction activity.
While the company’s main strength lies in Construction Projects, it also has a diversified approach to undertaking specialized structural work such as flyovers, rail under bridges, rail over bridges, approach roads, and the development and redevelopment of railway stations. The company undertakes these projects both as EPC services on a fixed sum turnkey basis and on an item-rate/percentage basis.
Our expertise extends to large-scale infrastructure projects such as flyovers, rail under bridges, rail over bridges, approach roads, and the development and redevelopment of railway stations.
Since its inception, the company has grown into a well-established EPC player, known for its expertise in construction and infrastructure projects. It has completed specialized structures in four Indian states—Punjab, Haryana, Rajasthan, and Uttarakhand—as well as in two Union Territories, Chandigarh and the National Capital Territory of Delhi.
The company is currently handling 12 active projects, including 7 EPC projects and 5 under item-rate contracts. These include 4 hospital and medical college projects, 1 administrative building, and 1 industrial building. It is also working on 4 projects to improve or redevelop railway stations and 2 projects involving rail over bridges.
Deepak Builders & Engineers are accredited as a Class I – (Super) Contractor with the Central Public Work Department, Government of India, and as of the date of the RHP, it is pre-qualified to bid independently for single projects up to a tender value of Rs.650 crores. As of June 30, 2024, the company’s order book amounted to Rs.1,380.38 crores.
Overall, the company operates under the three business verticals.
Construction Projects business
Infrastructure Projects business
Sale of products.
Deepak Builders & Engineers IPO - Financial Overview
The following table shows you the key financial details of Deepak Builders & Engineers IPO for three financial years:
Parameter | Q1FY25 (Rs in crore) | FY24 (Rs in crore) | FY23 (Rs in crore) | FY22 (Rs in crore) |
Total income | 106.34 | 516.74 | 435.46 | 364.99 |
Total revenue from operations | 105.11 | 511.4 | 433.46 | 363.05 |
Current Ratio | 1.71 | 1.65 | 1.46 | 1.26 |
EBIDTA | 31.44 | 117.54 | 52.89 | 43.87 |
EBIDTA Margin (in %) | 29.92% | 22.98% | 12.20% | 12.08% |
Net Profit for the Year | 14.21 | 60.41 | 21.4 | 17.66 |
Net Profit Margin (in %) | 13.52% | 11.81% | 4.94% | 4.87% |
Return on Net Worth (in %) | 9.57% | 52.39% | 26.80% | 28.40% |
Return on Capital Employed (in %) | 8.97% | 41.72% | 26.10% | 27.26% |
Debt-Equity Ratio | 0.91 | 1 | 1.04 | 1.11 |
Net Debt / EBITDA Ratio | 4.83 | 1.3 | 1.77 | 1.81 |
If we take a look at the financials of Deepak Builders & Engineers IPO, we can see that the company’s total revenue has increased from Rs,364.99 crores in FY22 to Rs.516.74 crores in FY24. Similarly, its profits have also increased from Rs.17.66 crores in FY22 to Rs.60.41 crores in FY24. Along with the increasing profits, the company has also increased its profit margins which indicates that the company has been able to manage expenses efficiently.
The company has reported an ROE of 52.39% and an ROCE of 41.72% as of FY24 suggesting that the company has given excellent returns to its shareholders and is also using its efficiently. Despite being a capital-intensive business, the company is not overburdened with debt which is indicated by its debt-to-equity ratio of 1 as of FY24.
Furthermore, the company has reported a strong order book of Rs.1,380.38 crores as of June 30, 2024, which gives an idea of the anticipated revenues from the uncompleted portion of existing contracts.
Deepak Builders & Engineers IPO - Industry Overview
The construction industry in India is on a strong growth trajectory and is expected to reach USD 1.4 trillion by 2025 contributing 8%-10% to the country's GDP. This is a comparatively big increase from its current market size of USD 820 billion. The Indian government's Gati Shakti National Master Plan is a major force behind this growth, aiming to streamline infrastructure development across different sectors and create a national logistics network to improve efficiency and cut costs.
The Bharatmala Pariyojana initiative is further supporting this by focusing on building a top-class highway network of over 83,000 kilometers, including expressways, ring roads, and economic corridors, to improve connectivity, promote regional development, and boost trade.
Deepak Builders & Engineers IPO - Peer Comparison
The following table shows you the key financial details of Deepak Builders & Engineers along with its industry peers as of FY24:
Particulars | Deepak Builders & Engineers | IRCON International Limited | Ahluwalia Contracts (India) Limited | PSP Projects Limited | ITD Cementation Limited |
Order book | 1,112.68 | 27,208.00 | 19,706.70 | 3,12,024.00 | 19,282.00 |
Revenue from operations (Rs in crore) | 511.4 | 11,950.40 | 3,855.30 | 2,462.50 | 7,542.00 |
PAT (Rs in crore) | 60.41 | 862.9 | 375.55 | 123.9 | 274 |
PAT Margin (%) | 11.81% | 7.22% | 9.74% | 5.03% | 3.63% |
RoE (%) | 52.39% | 15.76% | 23.44% | 13.55% | 20.00% |
RoCE (%) | 41.72% | 15.12% | 27.91% | 18.22% | 27.40% |
Deepak Builders & Engineers, with an order book of Rs 1,112.68 crore and revenue from operations at Rs 511.4 crore, appears significantly smaller in scale compared to its peers. However, Deepak Builders demonstrates strong profitability, with a PAT margin of 11.81%, which is higher than IRCON (7.22%) and PSP Projects (5.03%).
Additionally, its return on equity (RoE) of 52.39% and return on capital employed (RoCE) of 41.72% are notably higher, indicating better efficiency in generating returns on investments compared to other players in the industry.
Deepak Builders & Engineers IPO - Objective Of The Issue
The net proceeds from the fresh issue of Deepak Builders & Engineers IPO shall be used by the company for the following purposes:
Repayment/prepayment, in full or part, of certain borrowings availed by the Company
Funding of working capital requirements of the Company
General corporate purposes.
Deepak Builders & Engineers IPO Details
Deepak Builders & Engineers IPO Date
Deepak Builders & Engineers IPO is open to subscription from October 21, 2024, to October 23, 2024. The shares will be allocated to investors on October 24, 2024, and the company will be listed in the NSE and BSE on October 28, 2024
Deepak Builders & Engineers IPO Issue Price
Deepak Builders & Engineers IPO is offering its shares in the price band of Rs.192 to Rs.203 apiece. This means you would require an investment of Rs.14,819 per lot (73 shares) if you are bidding for the IPO at the upper price band.
Deepak Builders & Engineers IPO Size
The Deepak Builders & Engineers IPO is offering a total of 12,810,000 shares, amounting to Rs. 260.04 Crores. Out of these, 10,700,000 shares worth Rs. 217.21 Crores are offered through a fresh issue, and 2,110,000 shares worth Rs.42.83 Crores are offered through an offer for sale.
Deepak Builders & Engineers IPO GMP
Many investors look at the Grey Market Premium (GMP) before applying for the Deepak Builders & Engineers. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong Deepak Builders & Engineers is. Thus, it is important to financially analyze the stock before investing in it.
Deepak Builders & Engineers IPO Allotment Status
The shares from Deepak Builders & Engineers IPO will be allotted to its investors on October 24, 2024. One can check the allotment status for Deepak Builders & Engineers IPO from its registrar Link Intime India Private Limited, the BSE website, or your broking platform where you have applied for the Deepak Builders & Engineers IPO.
Deepak Builders & Engineers IPO Application Link
Open demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.
Apply for Deepak Builders & Engineers IPO
Is Deepak Builders & Engineers IPO a Good or Bad Investment? Final Thoughts
Deepak Builders & Engineers IPO Review: The Deepak Builders & Engineers IPO presents a mixed investment opportunity. While the company demonstrates strong financial growth, and impressive profitability metrics, and operates in a promising sector, it's notably smaller than its listed peers. This size difference could impact its competitiveness for large projects.
The company's solid order book and the projected growth in India's construction industry are positive factors, but investors should also consider the sector's cyclical nature and dependence on economic conditions. Ultimately, potential investors should carefully weigh these factors against their own risk tolerance and investment goals before deciding whether to participate in this IPO.
For those interested in investing in such IPOs, you can open demat account with Rupeezy. Our trading platform allows you to participate in various investment opportunities including initial public offerings.
