Dilip Buildcon gains 15% on stock market debut

Construction company Dilip Buildcon Ltd gained on its stock market debut on Thursday with its shares listing at a 9.5% premium to the issue price and closing 15% higher.

Shares of Dilip Buildcon started trading at Rs 240 apiece on the BSE, up from the initial public offering price of Rs 219. The shares traded between Rs 239.25 and Rs 255 during the day before closing at Rs 251.95 in a Mumbai market that gained 0.3%. At the closing price, the company has a market value of Rs 3,446 crore ($516 million).

The listing came after the company’s IPO was oversubscribed almost 20 times, thanks to strong interest from corporate houses and rich individuals.

The Bhopal-based firm joins a growing list of companies that includes business services provide Quess Corp, diagnostics firm Thyrocare and microlender Equitas that have made strong debuts on the bourses this year.

Dilip Buildcon also joins infrastructure companies Sadhbav Infrastructure Project Ltd, PNC Infratech Ltd and MEP Infrastructure Developers Ltd in listing on the bourses over the past year. Also, GR Infraprojects Ltd has picked bankers for its planned IPO while GVR Infra Projects Ltd is in the queue to float a public issue. 

Dilip Buildcon’s IPO comprised a fresh issue to raise Rs 430 crore and an offer for sale of about 10.23 million shares. This included an offer for sale of 1.13 million shares by the company's promoters Dilip Suryavanshi and Devendra Jain, and 7.95 million shares by private equity firm BanyanTree Growth Capital.

Ahead of the IPO, the company sold 8.95 million shares to raise Rs 192 crore (about $29 million) from a bunch of anchor investors by selling shares at the upper end of its price band of Rs 214-219. On Thursday, Abu Dhabi Investment Authority, one of the anchor investors, bought shares worth Rs 37 crore in the firm.

The company will use the proceeds of the fresh share issue to repay loans, meet working capital requirements and for other corporate purposes.

Dilip Buildcon had initially filed its draft red herring prospectus with the capital markets regulator Securities and Exchange Board of India (SEBI) in April last year. At the time, it sought to raise up to Rs 650 crore (then $104 million) via a fresh issue. BanyanTree was then looking for a complete exit by selling about 11.4 million shares, or a stake of around 9.75%; it had invested Rs 75 crore to buy just under 10% stake in the firm. 

The company refiled its IPO documents with SEBI in February and cut the size of the fresh issue as well as the quantum of shares offered for sale by BanyanTree. It received SEBI approval for the revised proposal in March.

Axis Capital Ltd, IIFL Holdings, JM Financial Institutional Securities and PNB Investment Services managed the issue.

Founded in 1988, Dilip Buildcon provides engineering, procurement and construction services in the roads and irrigation sectors.

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