Desco Infratech IPO, Day 2: Check GMP, Subscription Status, Price Band And More

The initial public offering of Desco Infratech Ltd. which opened for subscription on Monday, March 24 was fully subscribed on Day 1. The SME IPO was booked 2.43 times led by demand from non-institutional investors.

The infrastructure company aims to raise nearly Rs 31 crore through the offer.

Here's all you need to know about the Desco Infratech IPO as bidding for the issue resumes on Day 2.

Desco Infratech IPO is a book-built issue valued at Rs 30.75 crore. It consists entirely of a fresh issue of 20.50 lakh shares offered at a price band of Rs 147 and Rs 150 apiece. Retail investors can bid in the IPO with a minimum lot size of 1,000 shares totalling an investment of Rs 1.5 lakh. 

As per the company's RHP, of the 20,50,000 shares offered - 3,86,000 (18.83%) is allocated to qualified institutions, 2,94,000 (14.34%) is allocated to non-institutional investors, 6,86,000 (33.46%) is allocated to retail investors and 5,77,000 (28.15%) is allocated to anchor investors.

The subscription window for the Desco Infratech IPO will remain open from Mar. 24 to Mar. 26. Shares in the public offer are expected to be allotted on Mar. 27. Investors who do not receive an allotment will have their refunds initiated on Mar. 28. Those allotted shares will be credited to their demat accounts on the same day. 

Desco Infratech IPO is set to make its debut on BSE SME with the tentative listing date being Apr. 1, 2025.

The book-running lead manager for the IPO is Smart Horizon Capital Advisors Pvt., while Bigshare Services Pvt Ltd serves as the registrar. Rikhav Securities Ltd. is the market maker for Desco Infratech IPO.

The IPO has been subscribed 6.34 times as of 3:44 pm on Tuesday

• Qualified Institutions: 0.98 times

• Non-Institutional Buyers: 10.67 times

• Retail Investors: 7.5 times

Subscription status will be updated at regular intervals.

The latest grey market premium (GMP) for the Desco Infratech IPO was Rs 18 on Tuesday. Given the upper end of the IPO’s price band of Rs 150, the estimated listing price is expected to be Rs 168, factoring in the current GMP. This suggests a potential gain of around 12% per share upon listing.

Note: Please note that GMP is not an official data source, and is based on speculation.

Desco Infratech plans to allocate a portion of the net proceeds from the IPO towards capital expenditure for establishing its corporate office in Surat, Gujarat. The company intends to invest in buying new machinery to improve operational capacity. A part of the proceeds will be used to meet the company’s working capital requirements. The remaining funds will be directed toward general corporate purposes.

Business

Founded in January 2011, Desco Infratech Ltd. specialises in engineering, planning and construction across various sectors. With a focus on City Gas Distribution (CGD), renewable energy, water management and power infrastructure, the company develops critical infrastructure projects. Its expertise extends to constructing pipelines, roads, bridges, power transmission networks and water supply systems.

Financials

Desco Infratech Ltd. has shown consistent growth in both revenue and profitability over the years.

For the half-year ended Sep. 30, 2024, the company reported a revenue of Rs 22.75 crore, with profit after tax (PAT) of Rs 3.38 crore.

For the full fiscal year ending Mar. 31, 2024, revenue stood at Rs 29.49 crore, slightly higher than Rs 29.28 crore in FY23 and significantly up from Rs 19.92 crore in FY22.

Net profit also improved, with PAT at Rs 3.46 crore in FY24, Rs 1.23 crore in FY23 and Rs 83 lakh in FY22.

Disclaimer: Investments in initial public offerings are subject to market risks. Please consult with financial advisors and read the red herring prospectus thoroughly before placing bids.