DEE Development Engineers Limited is an engineering company providing specialized process piping solutions for industries such as oil and gas, power (including nuclear), chemicals and other process industries through engineering, procurement and manufacturing. They have manufacturing experience of over three and a half decades and have been able to leverage the brand, strategically located manufacturing facilities and engineering capabilities to successfully expand the business. As part of the specialized process piping solutions, they also manufacture and supply piping products such as high-pressure piping systems, piping spools, high frequency induction pipe bends, Longitudinally Submerged Arc Welding pipes, industrial pipe fittings, pressure vessels, industrial stacks, modular skids and accessories including, boiler superheater coils, de-super heaters and other customized manufactured components. Company provide comprehensive specialized process piping solutions including engineering services such as pre bid engineering, basic engineering, detailed engineering and support engineering which includes engineering of process/ power piping systems for projects, and pre-fabrication services such as cutting and beveling on conventional and CNC machines, welding services on semi-automatic and fully automatic robotic welding machines, conventional and digital radiography, post weld heat treatment using CNG fired fully calibrated furnaces and induction heating process, hydro testing, pickling and passivation, grit blasting (manual and semiautomatic) and painting (manual and semiautomatic). They also specialize in handling complex metals such as varying grades of carbon steel, stainless steel, super duplex stainless steel, alloy steel and other materials including inconel and hastelloy in the manufacturing processes. Company has seven strategically located Manufacturing Facilities at Palwal in Haryana, Anjar in Gujarat, Barmer in Rajasthan, Numaligarh in Assam and Bangkok in Thailand, with three Manufacturing Facilities located at Palwal, Haryana. They also operate a temporary Manufacturing Facility in Barmer, Rajasthan which is a dedicated facility set up to cater to the piping and erection requirements of the HPCL Rajasthan Refinery Limited (the 'Barmer Satellite Facility'). The wholly owned subsidiary, DFIPL, also operates a heavy fabrication facility at Anjar, Gujarat (the 'Anjar Heavy Fabrication Facility'). They also have a dedicated engineering facility located at Chennai in Tamil Nadu (the 'Chennai Engineering Facility'). The seven Manufacturing Facilities, the Anjar Heavy Fabrication Facility and Chennai engineering Facility together span an area of approximately 437,453.85 square meters. The Manufacturing Facilities had cumulative installed capacity of 70,875 MT, 94,500 MT per annum, 91,500 MT per annum and 86,500 MT per annum for the nine months ended December 31, 2023 Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively; and the capacity utilisation, calculated on the basis of the total production capacity was 51.53%, 43.10%, 27.40% and 27.77% for the nine months ended December 31, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. They have commenced operations at the New Anjar Facility I which has an installed capacity of 3,000 MT per annum and are in the process of enhancing the manufacturing capabilities by setting up a new manufacturing facility at the New Anjar Facility II with a proposed installed capacity of 9,000 MT per annum, which will increase the total installed production capacity of the Anjar facilities (excluding the heavy fabrication capacity) from 3,000 MT per annum to 15,000 MT per annum. In the nine months ended December 31, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021, they supplied the products to domestic customers and the overseas customers in countries including USA, Europe, Japan, Canada, Middle East, Nigeria, Vietnam, Singapore, China and Taiwan. In the nine months ended December 31, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021 the revenue from operations outside India was Rs 2,211.10 million, Rs 2,685.92 million, Rs 1,681.48 million and Rs 2,259.62 million, respectively, which represented 40.53%, 45.10%, 36.48% and 45.63% of the revenue from operations for the respective period/years. Over decades of the operations, they have developed strong relationships with the customers, including global companies such as JGC Corporation, Nooter Eriksen, MAN Energy Solutions SE, Mitsubishi Heavy Industries, and John Cockerill S.A, and Indian companies such as Reliance Industries Limited, Thermax Babcock & Wilcox Energy Solutions Limited India, HPCL–Mittal Energy Limited, Toshiba JSW Power Systems Private Limited, UOP India Private Limited, Doosan Power Systems India Private Limited and Andritz Technologies Private Limited and have built a loyal base of customers across the markets through relationships with several of these customers for more than a decade. In the nine months ended December 31, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021, they supplied the products and provided engineering services to 95, 82, 74 and 71 customer groups excluding scrap, respectively. As per financial performance, DEE Development Engineers Limited has posted total income / net profits of Rs 513.02 Cr / Rs 14.20 Cr (FY21), Rs 470.83 Cr / Rs 8.19 Cr (FY22), Rs 614.32 Cr / 12.97 Cr (FY23) and Rs 557.86 Cr / Rs 14.33 Cr (Q3 FY24). So as per previous financials data, company has shown average growth. Company has an average EPS of Rs 2.14 and average RoNW of 2.78% for last three fiscals. Issue is priced at a P/BV of 2.46 as per NAV of Rs 82.59/- as on 31.12.23. Order book as of 31.12.23 is Rs 828.70/- Cr, around 139% of FY23 total revenue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 171, 108.06 and 73.33 respectively, which looks aggressively priced. As per RHP, comparision between listed peers is shown in above table. On BRLM's front, two lead managers are associated with this IPO, and have handled around 30 IPOs in last three fiscals. SBI Capital Markets Limited: This is 18th Main Board IPO from this BRLM. From last 10 Main Board IPOs, four opened below issue price and remaining opened above or at par issue price on the day of listing. As of now, from last 10 Main Board IPOs, three are trading below issue price and remaining are trading above issue price. ( As on 12.06.2024) Equirus Capital Private Limited: This is 14th Main Board IPO from this BRLM. From last 10 Main Board IPOs, three opened below issue price and remaining opened above or at par issue price on the day of listing. As of now, from last 10 Main Board IPOs, three are trading below issue price and remaining are trading above issue price. ( As on 12.06.2024) As per financials, DEE Development Engineers Limited has shown average growth, RoNW is 3.14% and P/E is respectively 171.00, 108.06 and 73.33 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced. Company is in business of providing specialized process piping solutions for industries such as oil and gas, power (including nuclear), chemicals and other process industries through engineering, procurement and manufacturing, and a specialized player with good customer relationship. Also order book is around Rs 828.70/- Cr as on 31.12.23. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
✍️ Post a Comment