Deepak Builders Faces Financial Decline Amid Strong Debt Servicing Capacity and Growth Potential

Deepak Builders & Engineers India, a microcap player in the construction industry, has recently undergone an evaluation adjustment reflecting its current financial standing. The company reported negative financial performance for the quarter ending March 2025, with key metrics indicating a decline. Profit Before Tax (PBT) fell to Rs 14.96 crore, marking a significant drop of 42.9% compared to the previous four-quarter average. Similarly, Profit After Tax (PAT) decreased to Rs 11.20 crore, down 43.6% from the same benchmark. The company's PBDIT also reached its lowest point at Rs 22.68 crore.
Despite these challenges, Deepak Builders maintains a strong ability to service its debt, evidenced by a low Debt to EBITDA ratio of 1.26 times. The company has demonstrated healthy long-term growth, with operating profit increasing at an annual rate of 51.41%. Additionally, the Return on Capital Employed (ROCE) stands at 19.3, suggesting an attractive valuation with a 1.4 Enterprise Value to Capital Employed ratio. Notably, institutional investors have increased their stake in the company by 0.65% over the previous quarter, now holding a collective 3.87%.

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