Dee Development Engineers (DDEL),
is an engineering company providing specialized process piping solutions for
industries such as oil and gas, power (including nuclear), chemicals and other
process industries through engineering, procurement and manufacturing. As part
of its specialized process piping solutions, it manufactures and supplies
piping products such as high-pressure piping systems, piping spools, high
frequency induction pipe bends, Longitudinally Submerged Arc Welding pipes,
industrial pipe fittings, pressure vessels, industrial stacks, modular skids
and accessories including, boiler superheater coils, de-super heaters and other
customized manufactured components.
DDEL provides comprehensive
specialized process piping solutions including engineering services such as pre
bid engineering, basic engineering, detailed engineering and support
engineering, which include engineering of process/ power piping systems for
projects, and pre-fabrication services such as cutting and beveling on
conventional and CNC machines, welding services on semi-automatic and fully
automatic robotic welding machines, conventional and digital radiography, post
weld heat treatment using CNG fired fully calibrated furnaces and induction
heating process, hydro testing, pickling and passivation, grit blasting (manual
and semiautomatic) and painting (manual and semiautomatic).
It also specializes in handling
complex metals such as varying grades of carbon steel, stainless steel, super
duplex stainless steel, alloy steel and other materials including inconel and
hastelloy in manufacturing processes.
Currently DDEL has seven
strategically located manufacturing facilities at Palwal in Haryana, Anjar in
Gujarat, Barmer in Rajasthan. Numaligarh in Assam and Bangkok in Thailand, with
three manufacturing facilities located at Palwal, Haryana. It also operates a
temporary manufacturing facility in Barmer, Rajasthan which is a dedicated
facility set up to cater to the piping and erection requirements of the HPCL
Rajasthan Refinery Limited (the “Barmer Satellite Facility”). Its wholly owned
subsidiary, DFIPL, also operates a heavy fabrication facility at Anjar, Gujarat
(the “Anjar Heavy Fabrication Facility”). DDEL also have a dedicated
engineering facility located at Chennai in Tamil Nadu (the “Chennai Engineering
Facility”).
Seven Manufacturing Facilities,
the Anjar Heavy Fabrication Facility and Chennai engineering Facility together
span an area of approximately 437,453.85 square meters and have a cumulative
installed capacity of 94500 MT/annum.
The company operates two biomass
power generation plants in the state of Punjab at Abohar and Muktsar (operated
by MPPL, a WoS) with a contracted annual
capacity of 8 MW and 6 MW, respectively.
Further, DDEL manufactures wind
turbine towers through its wholly owned subsidiary, DFIPL, at its Anjar Heavy
Fabrication Facility. DFIPL is also involved in the manufacturing of industrial
stacks. DDEL intend to develop pilot
plants which cater to the research and development needs of companies in the
oil and gas, petrochemicals, refineries, specialty chemicals, pharmaceuticals
and nuclear sectors, as well towards the research and development needs of
educational research institutions. So
the new expanded business of design, engineering, fabrication and manufacturing
of pilot plants is carried from its Palwal Facility III.
It has commenced operations at
the New Anjar Facility I, which has an installed capacity of 3,000 MT per annum,
and is in the process of enhancing its manufacturing capabilities by setting up
a new manufacturing facility at the New Anjar Facility II with a proposed
installed capacity of 9,000 MT per annum, which will increase the total
installed production capacity of Anjar facilities (excluding its heavy
fabrication capacity) from 3,000 MT per annum to 15,000 MT per annum.
It supplies customers in domestic
as well as overseas (in countries including USA, Europe, Japan, Canada, Middle
East, Nigeria, Vietnam, Singapore, China and Taiwan). Revenue from operations
outside India was 40.53% and 45.10% in 9mFY24 and FY23 respectively. Revenue
mix in terms of key end use sector/industry in 9mFY24 was 52.76% from Oil &
Gas, 24.65% from power, 11.39% from process industries. Additionally the
biomass power generation accounts for 11.20% of 9mFY24 revenue.
Over decades of it operations,
the company has developed strong relationships with its customers, including
global companies such as JGC Corporation, Nooter Eriksen, MAN Energy Solutions
SE, Mitsubishi Heavy Industries, and John Cockerill S.A, and Indian companies
such as Reliance Industries Limited, Thermax Babcock & Wilcox Energy
Solutions Limited India, HPCL–Mittal Energy Limited, Toshiba JSW Power Systems
Private Limited, UOP India Private Limited, Doosan Power Systems India Private
Limited and Andritz Technologies Private Limited and has built a loyal base of
customers across its markets through relationships with several of these
customers for more than a decade.
DDEL as end of Dec 2024 had an order book (OB) worth Rs.
828.704crore, which translate into 139.16% of its FY23 operational
revenue. The OB is from diverse sector
with 73.8% from O&G, 24.3% from Power and 1.9% from process industries. Of the
order book. about 65.9% if overseas orders and balance 34.1% is domestic
orders.
The issue
The initial public offer
comprises Fresh Issue (equity share aggregating upto Rs 325 crore) and the
Offer for Sale of 45,82,000 Equity Shares.
The offer for sale is made by Krishan Lalit Bansal, the promoter selling
shareholder. Krishan Lalit Bansal will
hold 50.77% stake on post issue expanded equity.
Objects of the issue
Of the net proceeds of the offer,
about Rs 75 crore will be used for funding working capital requirements of the
company; Rs 175 crore for prepayment or repayment of all or a portion of
certain outstanding borrowings availed by the company; and balance for general
corporate purposes.
Total borrowings as end of Dec
2024 stood at Rs 386.19 crore.
Strength
One of leading process pipe
solution providers in the world, in terms of technical capability to address
complex process piping requirement arising from multiple industrial segments.
Wide range of specialized product
offerings and services making the company as a comprehensive solution provider
for its diversified customers spread across geographies and sectors
Over three and a half decades of
manufacturing experience and has been able to leverage brand, strategically
located manufacturing facilities and engineering capabilities to successfully
expand its business.
Long standing customer
relationships with a strong order book
Strong focus on automation and
process excellence with an experienced engineering team to drive operational
efficiencies
Weakness
Top 1/10/20 customers accounted
for 12.46%, 66.18% and 86.19% of the revenue in 9mFY24 signaling significant
customer concentration.
Any downturn in the oil and gas,
power (including nuclear), process industries, chemical sectors would create an
adverse impact on revenue from
operations, cash flows and financial conditions.
Under utilisation of manufacturing capacities over extended
periods, or significant under utilisation in the short-term, could materially
and adversely impact the profitability of the company. The Palwal Facility I,
that largely caters to power sector is grossly underutilized with capacity
utilization about 5-6% in FY23 and 9mFY24.
Subsidiaries have incurred losses
in the last three Fiscals and may do so in future also.
Failure to renew PPA with Punjab
State Power Corporation for biomass power plant will have adverse impact on the
profitability. Lack of availability of feedstock at fair price is also crucial
for availability and PLF of the plants.
There have been delays in filing
of certain employee provident fund returns of the Company and its Subsidiaries
and default/ delay in payment of certain statutory dues.
The Barmer Satellite Facility is
a dedicated facility set up to cater to the piping and erection requirements of
the HPCL Rajasthan Refinery, which may shut down once the project is completed.
Failure to renew, maintain or
obtain the required permits or approvals from customers/regulators in time may
result in interruption of operations or
loss of business. Change in export-Import
policies at key geographies of the company also impact the business of the
company.
Valuation
Consolidated (re-stated) sales
for FY2023 were up 29% to Rs595.50 crore. With a 240-bp contraction in the OPM,
OP was up 7% to Rs 69.18 crore. After
accounting for higher other income, higher interest and depreciation, the PBT
was up 53% to Rs 20.37 crore. Pat after MI was up 58% to Rs 12.97 crore.
Consolidated sales in the
ninemonths ended December 2023 were Rs 545.55 crore. OP was Rs 67.94 crore,
with the OPM standing at 12.5%. Pat was Rs 14.34 crore.
On post-issue expanded equity (at
the upper price band), the EPS for FY2023 and annualized 9mFY2024 were 1.9 and 2.8,
respectively. The asking price, at the upper price band, discounts the
annualized 9mFY24 EPS by 72.5 times. The price/BV stood at 1.8 times. There is no
properly comparable listed peer.
Dee Development Engineers : Re-stated Consolidated Financials
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2103 (12)
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2203 (12)
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2303 (12)
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2312 (9)
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Sales
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495.22
|
460.92
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595.50
|
545.55
|
|
OPM (%)
|
10.8
|
14.0
|
11.6
|
12.5
|
|
OP
|
53.68
|
64.61
|
69.18
|
67.94
|
|
Other income
|
17.81
|
9.92
|
18.83
|
12.31
|
|
PBIDT
|
71.49
|
74.53
|
88.00
|
80.25
|
|
Interest
|
27.13
|
25.34
|
29.90
|
27.93
|
|
PBDT
|
44.37
|
49.19
|
58.10
|
52.32
|
|
Depreciation
|
35.54
|
35.90
|
37.73
|
33.29
|
|
PBT
|
8.83
|
13.29
|
20.37
|
19.03
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EO Exp
|
0.00
|
0.00
|
0.00
|
0.00
|
|
PBT after EO
|
8.83
|
13.29
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20.37
|
19.03
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Tax
|
-5.26
|
5.10
|
7.40
|
4.69
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PAT from Continuing Biz
|
14.08
|
8.20
|
12.97
|
14.34
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Share of Profit from Associates
|
0.12
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0.00
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0.00
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0.00
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PAT from Continuing Biz
|
14.21
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8.20
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12.97
|
14.34
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Minority Interest
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0.00
|
0.00
|
0.00
|
0.00
|
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Net profit
|
14.21
|
8.20
|
12.97
|
14.34
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EPS (Rs)*
|
2.1
|
1.2
|
1.9
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2.8
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* on post IPO fully dilluted
equity (on upper price band) of Rs 69.05 crore. Face Value: Rs 10
|
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EPS is calculated after excluding
EO and relevant tax
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Figures in Rs crore
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Source: Capitaline Corporate
database
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Dee Development Engineers : Issue
Highlights
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Fresh Issue (Rs crore)
|
325
|
Offer for sale (in equity share
nos.)
|
4582000
|
Price band (Rs.)
|
|
Upper
|
203
|
Lower
|
193
|
Post-issue equity (Rs crore)
|
|
in Upper price band
|
69.05
|
in Lower Price Band
|
69.88
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Post-issue promoter (including
promoter group) stake (%)
|
69.34
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Minimum Bid (in nos.)
|
73
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Issue Open Date
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19-06-2024
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Issue Close Date
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21-06-2024
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Listing
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BSE, NSE
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Rating
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43 /100
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