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Ongoing ‪IPO: Dilip Buildcon Limited

Ongoing ‪IPO: Dilip Buildcon Limited

Dilip Buildcon Limited Ipo


Company & Business Profile

Dilip Buildcon Ltd. is one of the leading private sector road-focused EPC contractors in India. The business comprises (i) construction business, under which the company undertakes roads, irrigation and urban development projects on an EPC basis; and (ii) infrastructure development business, under which the company undertakes building, operation and development of road projects on a BOT basis with a focus on annuity projects.

In the road construction business, the company mainly designs, constructs and maintains roads and highways on an EPC basis with a third party and EPC Contracts are awarded to the company through subsidiary companies and joint ventures.

In the irrigation business, the company undertakes to build canals and dams. The company entered into this business in FY14 to take advantage of the increasing opportunities in this area.

In the urban development business, the company undertakes redevelopment and re-densification of government housing and builds residential units under affordable housing schemes and other structures in group water supply schemes relating to irrigation or water supply for agricultural purposes. The company entered into this business in FY13.

In the infrastructure development business, the company develops and maintains roads and highways on a BOT basis. Presently company undertakes BOT projects opportunistically, considering factors such as their proximity to clusters where the company is executing other projects to maximize the efficiency of execution and profitability, and the potential cash flow from such projects after they become operational.

Objects of the Issue

The public issue comprises a fresh Issue and an offer for sale by the selling shareholders. The company will not receive any proceeds from the Offer for Sale. The proceeds from the fresh issue will be utilized towards the following:

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

Investment Positives

  • The company operates through an ownership model vs. a rental model for executing its projects which have led to higher margins for the company.
  • The company has tried to keep its time to execute projects well ahead of the schedule, winning them bonuses and lower completion costs.
  • The company owns one of the largest equipment banks in the country totalling 7,345 vehicles.
  • With best-in-the-class equipment, the average life of their assets is 8-10 years as against 3-4 years of the other players.
  • There has been strong revenue visibility. Revenue for the company grew at a CAGR of 38% on a consolidated basis.

For IPO notes, read, to apply call us at 0731-4217261.

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