Dilip Buildcon IPO review (Apply)

Review By Dilip Davda on Jul 26, 2016

Dilip Buildcon Ltd (DBL) is one of the leading private sector road-focused EPC contractors in India. During the last five Financial Years ended March 31, 2016 it has completed the construction of 47 road projects in the states of Madhya Pradesh, Gujarat, Himachal Pradesh, Rajasthan and Maharashtra in India, with an aggregate length of approximately 5,611.94 lane kms, achieving a CAGR of 38.18% of revenue growth on a consolidated basis for the said period. In addition to the states where DBL has completed projects, has expanded its presence to ten more states, Tamil Nadu, Punjab, Chhatisgarh, Jharkhand, Haryana, Telangana, Andhra Pradesh, Karnataka, Goa and Uttar Pradesh with ongoing projects.

As the owner of the one of the largest fleets of construction equipment in India, the company has maintained, as of March 31, 2016, a modern equipment fleet of 7,345 vehicles and other construction equipment from some of the world‘s leading suppliers, such as Schwing Stettar, Metso, Wirtgen and Vogele. DBL is one of the largest employers in the construction industry in India and employed 19,746 employees as of March 31, 2016.

Its core business is undertaking construction projects across India in the roads and irrigation sectors. The company specializes in constructing state and national highways, city roads, culverts and bridges. As a result of the natural growth of its road construction business, as well as the recent government support to the infrastructure sector and rising opportunities in new business areas, DBL recently expanded into the irrigation and urban development businesses. Thus its business comprises: (i) our construction business, under which it undertake roads, irrigation and urban development projects on an EPC basis; and (ii) infrastructure development business, under which it undertakes building, operation and development of road projects on a BOT basis with a focus on annuity projects. As of March 31, 2016, DBL had an order book of Rs. 10778.73 crore, consisting of 50 third party road EPC projects, six of our own road BOT projects, three irrigation projects, one mining project, one cable-stayed bridge project and three urban development projects. Management has claimed that they have completed all its projects well before the scheduled time and has thus improved its prestige and enhanced its margins with before time completion.

To repay highcost debt and meet working capital requirements and general corpus funds needs, the company is coming out with a maiden IPO to mobilize Rs. 654 crore (at the upper price band) with its combo offer of fresh equity issue of Rs. 430 crore (approx 19634703 equity share of Rs. 10 each) and offer for sale of 10227723 equity share worth Rs. 224 crore. Issue opens for subscription on 01.08.16 and will close on 03.08.16. Minimum application is to be made for 65 shares and in multiples thereon, thereafter. BRLMs to the IPO are Axis Capital Ltd, IIFL Holdings Ltd, J M Financial Institutional Securities Ltd and PNB Investment Services Ltd. Link Intime India Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE and NSE. After initial capital issued at par it issued further shares in the price range of Rs. 20 to Rs. 370. It has also issued bonus shares in the ratio of 1 for 2 in September 2009 and 2 for 1 in January 2015. Post IPO its current paid up equity capital of Rs. 117.14 cr. will stand enhanced to Rs. 136.78 crore.

On performance front, the company has (on a consolidated basis) reported turnover and net profit of Rs. 1926.87 cr. / Rs. 241.29 cr. (FY13), Rs. 2401.59 cr. /Rs. 185.69 cr. (FY14), Rs. 2768.51 cr. / Rs. 87.66 cr. (FY15) and Rs. 4348.98 cr. / Rs. 196.66 cr. (FY16). Thus although its top line has shown improvement, its net declined for FY14 and FY15. This is attributed to higher expenses for financial cost and provisions for depreciations due to investments in equipments in FY14 and FY 15. Its finance cost increased from Rs. 115.36 crore in FY 13 to Rs. 514.21 crore for FY16. Similarly its depreciation provisions stood higher from RS. 75.60 crore for FY13 to Rs. 284.13 crore for FY16. As the company will repay its high cost debt, it is expecting major savings in finance cost. For last five fiscals it has reported 36.3% CAGR in top lines and 32.5% in EBITDA. If we attribute the latest earnings on the fully diluted equity post IPO then asking price is at a P/E of around 15 which is just at or around same level compared to its peers.

On BRLM’s front, they have mixed track records for their past mandates on the day of listings.

Conclusion: Considering the next two year’s order book and the likely benefits in finance cost, company is expected to show better performance and ripe rewards on its investments. Issue may be considered for medium to long term investment.


Conclusion / Investment Strategy

Considering the next two year’s order book and the likely benefits in finance cost, company is expected to show better performance and ripe rewards on its investments. Issue may be considered for medium to long term investment.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Jul 26, 2016

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Dilip Buildcon IPO FAQs

  1. 1. Why Dilip Buildcon IPO?

    The initial public offer (IPO) of Dilip Buildcon Ltd offers an early investment opportunity in Dilip Buildcon Ltd. A stock market investor can buy Dilip Buildcon IPO shares by applying in IPO before Dilip Buildcon Ltd shares get listed at the stock exchanges. An investor could invest in Dilip Buildcon IPO for short term listing gain or a long term.

  2. 2. How is Dilip Buildcon IPO?

    Read the Dilip Buildcon IPO recommendations by the leading analyst and leading stock brokers.

    • Dilip Davda - Apply
    • Geojit Securities Ltd - Apply
    • Geojit Securities Ltd - Apply
    • ICICI Direct - Avoid
    • ICICI Direct - Avoid
  3. 3. Dilip Buildcon IPO what should investors do?

    Dilip Buildcon IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Dilip Buildcon IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Dilip Buildcon IPO good?

    Our recommendation for Dilip Buildcon IPO is to subscribe.

  5. 5. Is Dilip Buildcon IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Dilip Buildcon IPO.

  6. 6. When will Dilip Buildcon IPO allotment status?

    The Dilip Buildcon IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Dilip Buildcon IPO allotment status to check.

  7. 7. When will Dilip Buildcon IPO list?

    The Dilip Buildcon IPO will list on Thursday, August 11, 2016, at BSE, NSE.








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