Dilip Buildcon IPO review – what you should know

Dilip Buildcon Private Limited is one of the India’s private sector road-focused EPC contractors. They are going to introduce their IPO in the market. The firm have a business development process that helps them focus on selecting the right projects. They focus on India’s Engineering, Procurement and Construction (EPC) contractor and specializes in road project. The firm is coming with an initial public offer which will hit the primary market on August 1st, 2016. The company aims to raise around Rs 430 crore by offering shares at Rs. 214 – Rs. 219 Per Equity Share.

Dilip Ipo review

Dilip Buildcon Private Limited was established on June 12, 2006 at Bhopal, Madhya Pradesh. Their marketing and business development for construction services is carried out centrally in Bhopal. They are road-focused EPC contractors in India. Their core business is in roads and irrigation sectors and they also undertake construction projects across India. They are specialized in construction of state and national highways, city roads, culverts and bridges. As a result of the natural growth of their road construction business, as well as the government support to the infrastructure sector and rising opportunities in new business areas, they recently expanded into the irrigation and urban development businesses.

Their business comprises mainly of:

  • Construction business, under which they undertake roads, irrigation and urban development projects on an EPC basis; and
  • Infrastructure development business, under which they undertake building, operation and development of road projects on a BOT basis with a focus on annuity projects.

During the last five Financial Years, they completed the construction of 51 road projects in the states of Madhya Pradesh, Gujarat, Himachal Pradesh, Rajasthan and Maharashtra in India with length of approximately 5,858.49 lane kms. They have expanded their presence to nine more states namely Tamil Nadu, Punjab, Chhattisgarh, Jharkhand, Haryana, Telangana, Andhra Pradesh, Karnataka and Uttar Pradesh with ongoing projects.

Their achievements in the last five Financial Years are attributable to a combination of factors, including their ability to successfully and timely execute EPC projects, their focus on geographically clustering our projects for efficiency and profitability, their substantial investment in and efficient use of their construction equipment bank and in-house production of structural parts for their projects.

The firm have modern equipment fleet of 6,604 vehicles. The firm are employers in the construction industry in India and employed 17,781 employees.

Qualitative Factors

They believe the following business strengths allow them to successfully compete in the industry:-

  1. One of the leading road-focused EPC contractors.
  2. Efficient business model.
  3. Excellent execution track record through strong operating systems and controls.
  4. Strong financial performance and credit profile.
  5. Visible growth through a robust order book and excellent pre-qualification credentials.
  6. Experienced management and promoters.

Business Strategy

  • Continue focusing on enhancing execution efficiency.
  • Expanding geographical footprint.
  • Diversify into new businesses.
  • Maintain financial discipline.
  • Attract and retain talented employees.
  • Explore BOT projects opportunistically to optimize the project portfolio.
  • Actively bid for new projects.

OBJECTS OF THE ISSUE

Dilip IPO details

The public issue comprises a fresh Issue and an offer for sale by the selling shareholders..

  1. The Offer for Sale

They will not receive any proceeds from the Offer for Sale.

  1. The Fresh Issue

The proceeds from the fresh issue will be utilised towards the following objects:

  • Prepayment or scheduled repayment of a portion of term loans availed by the company;
  • To meet working capital requirements; and
  • General corporate purposes.

Financial

Dilip Financial details

The company revenues grew at 58% CAGR in the last 5 years ending FY15 which indicate strong growth. There profit are at 5.8% from 6 month ended Sep-15. They restated consolidated EPS for FY 2015 is Rs.8.19 and last 3 years average EPS Rs.13.7. As per ET.com, tt the price band Rs 214-219, the stock is valued at 11.7-11.4 times its trailing FY16 EPS, which is at a 25 per cent discount to some its peers like KNR Constructions and PNC Infratech. One thing to remember is Infrastructure Company have some issues in the past but hopefully now the tide is turning and we should be able to see better returns from them going forward.

Disclaimer: We are not SEBI registered advisor and this article is not an investment advice. We are not authorized to give investment advice nor do we provide it on this website. In case you are interested in investing, we would advise you to contact your advisor for the same. We cannot be held liable for any loss arising due to investment made as per this article.

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Comments

  1. why are you not writing anything risky about the company. the company has criminal cases pending. also its PAT has fallen in fy 14 n 15. ur only showing d positive image of d co misleading the investor. u should show the true picture whether good or bad.

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