Dilip Buildcon share price rallied as much as 10% on NSE in Thursday’s trading session after the company bagged a new order worth ₹1,800 crore from Petroleum and Natural Gas Regulatory Board.
Dilip Buildcon shares opened at ₹429 apiece today, as compared to previous close of ₹393 on Wednesday. The stock touched an intraday high of ₹439.70 on 10 September.
The stock has remained under pressure amid weak market sentiment, declining 6% over the past month and 12% year-to-date (YTD). Over the longer term, the stock has gained 25% over the past three years but has declined 19% over a five-year period.
Why Dilip Buildcon shares are rising today?
In an exchange filing on 9 September, Dilip Buildcon said that it has received a Letter of Intent (LoI) authorising it to lay, build, operate or expand an LPG pipeline connecting Paradip in Odisha with Raipur in Chhattisgarh.
According to the filing, the project is worth around ₹1,800 crore.
“The Project entails the grant of an exclusive license by PNGRB to act as the authorized entity for the development of “pipeline” infrastructure for the transportation of LPG, including financing, construction, and operation of the same, and to levy and collect tariff for the transportation of LPG up to the designated delivery point for operation period of 25 years after construction period of 3 years,” Dilip Buildcon said in a regulatory filing.
The project will be executed through a Special Purpose Vehicle (SPV), with Dilip Buildcon holding 100% equity in the entity. The project is expected to be completed within a period of 36 months.
As part of the project, Dilip Buildcon will be responsible for the design, financing, development, construction, operation and maintenance of the proposed LPG pipeline infrastructure, subject to the necessary approvals, authorisations and regulatory clearances from the Petroleum and Natural Gas Regulatory Board (PNGRB).
The proposed pipeline is expected to enable the transportation of LPG to the bottling plants of various oil marketing companies (OMCs), replacing the existing road-based movement of LPG through tankers. This is also expected to improve road safety by reducing the dependence on tanker transportation.
Dilip Buildcon said the pipeline may also be operated as a common carrier under the applicable PNGRB framework, allowing eligible OMCs and other users to access its capacity.
Revenue from the project will be generated through the applicable Petroleum and Petroleum Products Pipeline Transportation Tariff charged for transporting LPG through the pipeline.
“Accordingly, DBL’s role through SPV will be to develop and operate the LPG pipeline infrastructure and provision of transportation services. To clarify the matter, DBL will not be engaged in the procurement, trading, distribution or sale of LPG, or bear the associated commercial risks relating to LPG procurement and marketing,” the firm further said.
In an another exchange filing dated 10 September, the company announced the execution of definitive agreements for divestment of its stake in Mekhali Power Transmission Limited.
The company has announced the execution of definitive agreements to divest its stake in Mekhali Power Transmission Limited, a special purpose vehicle (SPV) developing the company’s under-construction power transmission project. The stake will be sold to Alpha Alternatives Fund Advisors LLP and/or its affiliates or funds managed by the firm. The transmission project has an estimated total cost of approximately ₹2,171 crore.
Mekhali Power Transmission Limited is developing, designing and engineering a 400-kilovolt substation power transmission project spanning around 470 circuit kilometres in Belagavi district, Karnataka.
“This transaction execution marks an important milestone in our DBL 2.0 journey as we build a multi-assets infrastructure platform anchored by long-duration, contracted assets. Our partnership with Alpha Alternatives across this transmission project enables us to recycle capital early in the asset lifecycle, while maintaining our disciplined focus on strengthening our balance sheet and building a more asset-light business,” said Devendra Jain, Managing Director & CEO, Dilip Buildcon.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
