Deepak Builders & Engineers India Limited IPO: Check IPO Date, Lot Size, Price & Details

DEEPAK BUILDERS AND ENGINEERS

Introduction:

Deepak Builders and Engineers is an integrated engineering and construction firm specializing in the development of various structures, including administrative and institutional buildings, hospitals, medical colleges, industrial buildings, memorial complexes, stadiums, residential complexes, and more. The company executes both construction and infrastructure projects through EPC contracts on a turnkey basis, as well as on item-rate or percentage-rate contracts.

Currently, Deepak Builders is managing 12 active projects, including seven EPC contracts and five item-rate contracts. These include hospital and medical college projects, institutional and industrial buildings, railway station upgrades, and road and bridge construction. Additionally, the company handles operation and maintenance activities as per project agreements.

IPO Details:

Objectives of Issue:

• Repayment/prepayment, in full or part, of certain borrowings availed by the Company;
• General Corporate Purposes.
• Funding of working capital requirements of the company

Key Strengths:

• Integrated In House Model- The company executes its construction business with a fully integrated model, leveraging its core competencies and internal resources to manage projects from concept through to completion. This in-house approach minimizes reliance on external parties for design, engineering, procurement of essential materials, and access to necessary machinery, allowing us to streamline project execution. Its integrated model supports the timely delivery of projects, ensuring adherence to established schedules.
• Diverse Portfolio– The company has completed around 63 key projects and is involved in construction of 13 ongoing projects across various industries and sector. These include construction activity across key industries such Commercial complexes (Heritage Historical / Memorial Buildings & Stadiums / Sports Complex), Logistics (Road Works, Flyover / ROB / RUB / Bridges), Healthcare (Hospital Building), Residential Buildings, Education (Institutional & Administration Buildings), which reflects towards their diverse portfolio and ability to tap in and provide wide range construction services
• Equipment Ownership- Effective management of equipment assets is key to delivering quality infrastructure and construction projects on time. Its strategic investment in modern, standardized machinery gives it a competitive edge by reducing equipment downtime and maintenance costs. With multiple projects running simultaneously, quick access to fleet ensures project efficiency and timely completion. As of June 30, 2024, it manages 398 major pieces of equipment, with a gross block value of ₹742.59 million, of which ₹474.19 million is dedicated to plant and machinery. In Fiscal 2024, it invested ₹100.61 million in equipment, continuing our commitment to operational excellence.

 Risks:

• Major Concentration of Government Entities– In the past three years, over 85% of the company’s revenue has been generated from government, semi-government, and government-affiliated entities. Furthermore, the company’s current order book is entirely comprised of contracts with government entities. Given this heavy reliance on government projects, the company could encounter challenges with payment delays or disruptions in operations if the government shifts its priorities away from the sectors in which the company operates, or if it is unable to secure new government contracts. Such changes could have a significant impact on the company's financial performance and operational stability.
• Concentrated Customer Mix- It has been observed that the top 5 customers of the company contribute more than 75% of the revenue of the company in the last 3 years. Hence any loss of customers could severally affect the revenue earning capability of the company and it could endanger its profitability.
• Corparate Governance Failure- The company and its promoter disclosed an undisclosed income of ₹15.67 crores following searches conducted under Section 132(1) of the Income Tax Act, 1961. Additionally, the company's promoter was convicted under the Foreign Exchange Management Act, 1999, involving a sum of ₹31.55 lakhs. Such violations by the promoters may have a negative impact on the company’s reputation.

Financial Snapshot:

Interest Coverage Ratio – Interest Coverage Ratio determines the ability of a company to fulfill its interest obligations. It is a ratio that compares company earnings (before interest and taxes) to interest expenses. Essentially, it shows how many times a company can pay its interest charges using its operating profit. A higher ICR suggests a company is in a good financial position to handle its debt, while a lower ICR could signal potential financial difficulties.

Debt to Equity Ratio - The debt-to-equity (D/E) ratio is used to evaluate a company’s financial leverage and is calculated by dividing a company’s total liabilities by its shareholder equity. It is a measure of the degree to which a company is financing its operations with debt rather than its own resources.

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