Dilip Buildcon: Stock Below Rs 500 Rallies 12% In 1-Day After Winning Mega LPG Pipeline Order; Buy The Stock?

Dilip Buildcon's share price rallied by more than 12% on Thursday after winning a mega new order of Rs 1,800 crore related to LPG pipeline deal. Dilip Buildcon is a small-cap and trades below Rs 500. Apart from this, the company also sold stakes worth Rs 2,171 crore in an under-construction power transmission project. That being said, should you buy Dilip Buildcon shares?

Dilip Buildcon Share Price

After the closing bell on September 10, the stock closed at Rs 404.95 apiece on BSE, up by 3.2% with a market cap of Rs 6,578.20 crore as investors booked profits of the early session. In the trading hours, Dilip Buildcon had skyrocketed by over 12% and touched an intraday high of Rs 439.90 apiece.

Dilip Buildcon Stake Sale

In the regulatory filing on September 10th, Dilip Buildcon said it executed definitive agreements for divestment of its stake in Mekhali Power Transmission Limited, the SPV undertaking the company's under-construction power transmission project to Alpha Alternatives Fund Advisors LLP and/or its affiliates and/or funds managed by Alpha
Alternatives Fund Advisors LLP ("Alpha Alternatives"). The total project cost of the transmission project is approximately Rs 2,171 crore.

Mekhali Power Transmission Limited is engaged in developing, designing, and engineering a 400-kilovolt sub-station power transmission project extending to approximately 470 circuit kilometers situated in Belagavi District, Karnataka.

Dilip Buildcon LPG Pipeline Order

Prior to this day, Dilip Buildcon revealed that it secured a new order for laying, building, operating, or expanding a petroleum and petroleum product (LPG) pipeline from Paradip, Odisha, to Raipur, Chattisgarh. The Project Authority is the Petroleum and Natural Gas Regulatory Board (PNGRB).

"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 an operation period of 25 years after construction period of 3 years," said Dilip Buildcon in the filing.

Under the new deal, the pipeline will facilitate the transportation of LPG to the bottling plants of various oil marketing companies (OMCs). Thereby, this will reduce or replace the existing road-based transportation of LPG through tankers.

As per the filing, the pipeline is proposed to be operated also as a common carrier, in accordance with the applicable PNGRB framework, with eligible OMCs/users accessing the pipeline capacity. The project will generate revenue through the applicable Petroleum and Petroleum Products Pipeline Transportation Tariff for transportation of LPG through the pipeline.

This is a major boost for both Dilip Buildcon and OMCs. DBL's role through SPV will be to develop and operate the LPG pipeline infrastructure and provision of
transportation services.

Dilip Buildcon will hold 100% equity in the special purpose vehicle (SPV). The cost of the project is Rs 1,800 crore and is expected to be executed in the next 36 months.

Buy Dilip Buildcon Shares?

The consensus recommendation from 5 analysts for Dilip Buildcon is BUY, as per Trendlyne data. The average target price for 12 months is set at Rs 515.60, which signals a potential 26.5% upside ahead.

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