Dee Development Engineers Limited, a distinguished entity in the engineering industry, is set to launch its Initial Public Offering (IPO). This step has attracted considerable interest from both investors and market experts.
The IPO’s main objective is to repay its debts and finance its working capital requirements. In this article, we will discuss the crucial information about Dee Development Engineers’ IPO such as important facts, date(s), history of the company, financial performance, how it intends to use funds raised from the IPO and advice for potential investors.
About Dee Development Engineers Ltd
Dee Development Engineers Limited is a prominent engineering company that excels in delivering process pipe solutions for various sectors, including oil and gas, chemicals, and electricity (nuclear included), among others.
Dee Development has managed to grow its business effectively over the last 35 years through a strong brand name and strategically placed production centres which are backed by engineering knowledge.
The company manufactures and supplies a wide range of piping products, including:
- Piping spools,
- High-pressure piping systems,
- High-frequency induction pipe bends,
- Industrial pipe fittings,
- Modular skids, etc.
Furthermore, they also provide accessories like desuperheaters, boiler superheater coils, and other customised components.
Dee Development Engineers has six manufacturing plants located in Gujarat, Haryana & Rajasthan and in Thailand. This extensive network has positioned the company as the largest provider of process piping solutions in the country based on installed capacity.
Dee Development Engineers IPO
The price of Dee Development Engineers’ IPO is set in the range of ₹193 to ₹203 per share with a face value of ₹10 each. To be precise, subscription will begin on Wednesday June 19 and close on Friday June 21.
The IPO valued at ₹418 crores, comprises a new issuance of shares amounting to ₹325 crores. Additionally, the promoter, Krishan Lalit Bansal, is offering 4,582,000 equity shares for sale. The bidding process allows investors to acquire a minimum of 73 shares and further in multiples of 73.
Also read: Understanding the difference between equity and debt IPO for the right investment
IPO reservation
| Investor Category | Shares Offered |
| QIB shares offered | Not more than 50% of the net issue |
| Retail shares offered | Not less than 35% of the net issue |
| NII (HNI) shares offered | Not less than 15% of the net issue |
The offer is being managed by Equirus Capital Private Limited and SBI Capital Markets Limited who are the book- running lead managers. In the meantime Link Intime India Private Ltd is acting as the registrar.
| IPO opening date | Wednesday, June 19 |
| Date of closure | Friday, June 21 |
| Face value | ₹10 per share |
| IPO price band | ₹193 to ₹203 per share |
| Lot size | 73 shares |
| Issue size | ₹418.01 Cr |
| Fresh issue | ₹325.00 Cr |
| Offer-for-sale | ₹93.01 Cr |
| Listing date | Wednesday, June 26 |
Must read: NFO or IPO – What do you think is the better option?
Fund utilisation plan
The company has detailed the following purposes for the net proceeds from the new share issuance:
Working capital: An allocation of ₹75 crores is planned to enhance the company’s working capital requirements.
Debt repayment: A sum of up to ₹175 crores will be used for the prepayment or repayment of existing loans.
General corporate purposes: The residual funds will be channelled towards various strategic initiatives as determined by the management.
Dee Development Engineers Ltd financials
Here is a snapshot of the company’s key financial indicators:
| Financials | 9M FY24 | FY23 | FY22 |
| Revenue from operations (₹ millions) | 5,455.54 | 5,954.95 | 4,609.16 |
| EBITDA (₹ millions) | 679.44 | 691.76 | 646.07 |
| Profit/loss (₹ millions) | 143.37 | 129.72 | 81.97 |
| Net debt (₹ millions) | 3,710.58 | 3,198.28 | 2,600.86 |
| ROCE | 3.91% | 3.91% | 3.99% |
| RONW | 3.35% | 3.14% | 2.04% |
Source: Dee Development Engineers RHP
Dee Development Engineers – Investment considerations
Strengths
- Established market position: Dee Development Engineers’ long-standing presence and reputation in the engineering sector provide a competitive advantage. The company’s extensive experience and strong client relationships enhance its market position.
In India, when it comes to installed capacity, the company is the leading provider of specialised process piping solutions.
- Diversified portfolio: As a comprehensive manufacturing partner, the company offers ‘design-led-manufacturing’ solutions, ensuring their customers’ products meet high standards of reliability, safety, and performance. Their diverse product portfolio, catering to various business cycles across industries, reduces dependency on any single sector.
Weaknesses
- Dependency on manufacturing facilities: The business depends heavily on its manufacturing facilities and carries risks associated with use of heavy machinery. This may have an adverse effect on the company’s operations, financial health, cash flow and operational results in case there are any operational disruptions, wage demands or labour strikes.
- Exposure to cyclical industries: The performance of the company is subject to the cyclical trends of the industries it caters to, including oil and gas, and power. Any economic downturns or instabilities in these sectors can affect the demand for the products of Dee Development Engineers.
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Bottomline
Dee Development’s IPO offers a chance for investors to join the journey of a company firmly established in the process piping industry. Thoroughly examining the company’s financial health, comprehending the plan for fund usage, and assessing the pros and cons are vital for making educated investment choices.
Keep in mind, seeking advice from a financial advisor can offer personalised guidance aligned with your specific investment objectives and risk appetite.
