Deepak Builders & Engineers IPO Sees Strong Demand: Subscribed 4.12 Times, Know the GMP

Introduction: A Strong Start for Deepak Builders & Engineers IPO

The initial public offering (IPO) of Deepak Builders & Engineers kicked off on a high note, receiving an overwhelming response from investors on its first day. The IPO was subscribed 4.12 times overall, showing strong demand across investor categories.

Investor Segments and Subscription Details

The public issue has allocated shares across three key categories:

• Qualified Institutional Buyers (QIBs): 50% reserved, subscribed 0.52 times.
• Non-Institutional Investors (NIIs): 15% reserved, subscribed 4.20 times.
• Retail Investors: 35% reserved, subscribed 6.12 times.

The retail investors’ response was particularly robust, outpacing the other categories.

IPO Structure: Key Financials and Pricing

Deepak Builders has set a price band of Rs 192-203 per share, with the issue expected to close on October 23. The total IPO size stands at Rs 260.04 crore, consisting of:

• Fresh issue worth Rs 217.21 crore.
• Offer for Sale (OFS) of Rs 42.83 crore, with promoter Deepak Kumar Singal and Sunita Singal selling their shares.

Investors can subscribe to the IPO in a lot size of 73 shares, with subsequent multiples available.

Anchor Investors and Allocation

Before the IPO launch, five anchor investors infused Rs 78.01 crore into the company through an anchor book exercise on October 18. A total of 38,42,939 shares were allocated at Rs 203 per share to:

1. Neomile Growth Fund
2. Citadel Capital Fund
3. Saint Capital Fund
4. Zeal Global Opportunities Fund
5. Elite Capital Fund

Utilization of Proceeds

The company plans to utilize the proceeds from the fresh issue as follows:

• Rs 30 crore to repay debt.
• Rs 111.96 crore for working capital requirements.
• The balance will be used for general corporate purposes.

Company Overview: Infrastructure and Construction Projects

Deepak Builders & Engineers is primarily engaged in construction and infrastructure projects, operating as an Engineering, Procurement, and Construction (EPC) service provider. The company has diversified its services into structural work such as:

• Flyovers
• Rail over and under bridges
• Approach roads
• Other infrastructure projects

They offer both fixed-sum turnkey and item-rate contracts for these projects.

Ongoing Projects

Currently, the company has 12 ongoing projects, categorized into two segments:

• Construction Projects: This includes four hospital and medical college projects, one administrative and institutional building, and one industrial building.
• Infrastructure Projects: Comprising upgradation/redevelopment of four railway stations, two roads and bridges projects, and related infrastructure work.

Lead Manager and Grey Market Premium (GMP)

Fedex Securities is the lead manager for the IPO. According to the latest reports, the Grey Market Premium (GMP) for Deepak Builders stands at Rs 60, reflecting positive market sentiment.

Conclusion: A Promising Investment Opportunity

The strong subscription numbers and positive GMP indicate strong investor interest in Deepak Builders & Engineers IPO. With a focus on construction and infrastructure, along with well-diversified projects and robust plans for fund utilization, the company appears well-positioned for future growth. Investors may find this IPO an attractive opportunity, especially given its strong performance in the retail segment.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.