Deepak Builders & Engineers India Limited is an integrated engineering and construction company, specializing in execution and construction of administrative & institutional buildings, hospitals and medical colleges, industrial building, historical memorial complex, stadium and sports complex, residential complex and various developmental and other construction activity. They have diversified in undertaking specialized structural work such as flyovers, rail under bridge, rail over bridges, approach roads and development and redevelopment of railway stations. They undertake Construction & Infrastructure Projects both, as EPC services on a fixed sum turnkey basis as well as on an item-rate basis/percentage basis. Company is currently operating across four (4) states of India, i.e. Punjab, Haryana, Rajasthan, Uttarakhand and two (2) Union Territories i.e. Chandigarh and National Capital Territory of Delhi. Since, acquisition of business from Erstwhile Firm, they have completed seventeen (17) Projects including some prestigious projects, such as construction of Jang-E-Azadi Memorial at Kartarpur, Jalandhar, Punjab with a contract value amounting to Rs 2,183.60 million, development of Karuna Sagar Maharishi Valmiki Tirath Asthaan at Ram Tirath, Amritsar, Punjab with a contract value amounting to Rs 1,972.40 million, construction of Geriatrics Block in AIIMS Campus, New Delhi with a contract value amounting to Rs 2,243.20 million, construction of super specialty block at Government Medical College, Patiala with a contract value amounting to Rs 665.00 million. Currently, the Company has twelve (12) ongoing projects, including seven (7) EPC projects and five (5) item rate/percentage rate contracts. Of the total ongoing projects, the Construction Projects comprises of four (4) hospital and medical college projects, one (1) administrative & institutional buildings; one (1) industrial building; and the Infrastructure Projects comprises of four (4) projects relating to upgradation/development/redevelopment of Railway Station and related work, and two (2) roads & bridges projects relating to rail over bridges. Further, they also undertake operation and maintenance ('O&M') activities in accordance with the contractual obligations under the projects. As per financial performance, Deepak Builders & Engineers India Limited has posted total income / net profits of Rs 364.99 Cr / Rs 17.66 Cr (FY22), Rs 435.46 Cr / 21.39 Cr (FY23), Rs 516.74 Cr / Rs 60.41 Cr (FY24) and Rs 106.34 Cr / 14.21 Cr (30.06.24 FY25). So as per previous financials data, company has shown good results, but sudden rise in net profit just before IPO raises doubts. Also, the order book as on RHP date is Rs 1,380.39 Cr. Company has an average EPS of Rs 11.23 and average RoNW of 39.86% for last three fiscals. Issue is priced at a P/BV of 4.68 as per NAV of Rs 43.42/- as on 30.06.24. If we attribute latest earnings of FY23, FY24 and annualised FY25, then asking price is at a P/E of around 44.2, 15.65 and 16.63 respectively. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, one lead managers are associated with this IPO, and have handled around 33 IPOs in last three fiscals. Fedex Securities Private Limited: This is 34th IPO from this BRLM. From last 10 IPOs, all opened above issue price or at par on the day of listing. As of now, from last 10 IPOs, six are trading below issue price and remaining are trading above issue price. (As on 16.10.24) As per financials, Deepak Builders & Engineers India Limited has shown good results, RoNW is 52.39% and P/E is 44.2, 15.65 and 16.63 respectively as per FY23, FY24, and annualised FY24 earnings. So, issue looks fully priced as compared to listed peers and order book is also very strong. But sudden rise in net-profit raises doubts and it may be difficult to generate similar margins in future. Company is is an integrated engineering and construction company, which is very competitive and fragmented business segment. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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