Shares of DEE Development Engineers made a blockbuster debut on the stock exchanges on Wednesday, with the share price of the piping solutions company listing at a 67% premium over the initial public offering (IPO) price. On the NSE, the stock made debut at ₹339 apiece against the issue price of ₹203. On the BSE, the shares opened 60% higher at ₹325 over the IPO price.
Post listing, the share price of the Haryana-based piping solutions company rose as much as 80% to ₹365.7 on the BSE and the NSE, while the market capitalisation rose to ₹2,255 crore.
The listing of DEE Development Engineers shares was better than street expectations as the stock was commanding a grey market premium (GMP) of ₹90 over the issue price in the unofficial market, indicating the debut price to be around ₹293, up 44.3% over the IPO price.
“DEE Development Engineers, a leader in the specialised process piping solutions industry, witnessed a remarkable stock market debut, exceeding pre-listing expectations…This impressive performance surpasses the anticipated strong listing, fueled by the overwhelming investor response during the IPO,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.
Nyati says that DEE's strong competitive edge, established clientele, diverse product portfolio, robust order book, and consistent financial performance likely fueled investor enthusiasm. “The exceptional listing performance signifies strong investor confidence in the company's future prospects. However, it's crucial to maintain a balanced perspective now.”
She recommended investors to maintain a long-term view to the stock, with a stop-loss level at ₹300 level.
Established in 1988 by Chairman & Managing Director K.L. Bansal, the engineering company raised ₹418 crore via IPO route, which received an overwhelming response from investors. The issue, which was a combination of fresh issue of equity shares worth ₹325 crore and offer for sale of shares worth ₹93 crore, was subscribed 103.03 times. Under the OFS, promoter Krishan Lalit Bansal offloaded 45.82 lakh equity shares.
The public issue was subscribed 23.66 times in the retail category, 206.54 times in qualified institutional buyers (QIB) segment, and 149.38 times in the non-institutional institutional investors (NII) part. The company had reserved half of the issue for QIB, 15% for NII, and remaining 35% for retail investors. The retail part included reservation of shares worth up ₹1 crore for eligible employees, which were offered at a discount of ₹19 per equity share.
Out of the proposed equity issue size of ₹325 crore, the company intends to use capital worth ₹175 crore for repayment of outstanding borrowings; ₹75 crore for funding working capital requirements in fiscal 2025; and balance fund to meet general corporate purposes.
Ahead of the IPO, DEE Development raised over ₹125 crore from anchor investors by allotting 61,62,777 equity shares at upper end of the IPO price band of ₹193-203 per share.
The Haryana-based company provides specialised process piping solutions for industries such as oil and gas, power (including nuclear), chemicals and other process industries through engineering, procurement and manufacturing. The company has seven manufacturing facilities located at Palwal in Haryana, Anjar in Gujarat, Barmer in Rajasthan and Bangkok in Thailand; namely, Palwal Facility I, Palwal Facility II, Palwal Facility III, Anjar Facility I, Barmer Facility, and Bangkok Facility.
For the financial year ended March 31, 2023, DEE Development Engineers posted a 30.47% rise in revenue at ₹614.32 crore as compared to ₹470.84 crore in FY22. The net profit climbed by 58.25% to ₹12.97 crore from ₹8.20 crore in the previous fiscal.
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