Dhariwal Buildtech Limited IPO

01At a glance

What the company does: road engineering, procurement and construction: highways, bridges, railway over-bridges and tunnels for the Border Roads Organisation (BRO), state highways, rural roads under PMGSY and other civil works (DRHP p.24). It started hybrid-annuity (HAM) projects in 2023 and has not yet completed one (DRHP p.28).

Who pays it: government bodies, 98.89% of the March 2025 order book: NHAI 57.97%, BRO 25.36% and NHIDCL 9.85% (DRHP p.27, DRHP p.297). Bihar provided 50.06% of FY25 revenue and Madhya Pradesh 22.15% (DRHP p.39).

Why it is raising money: ₹1,742.26 million to repay the company's borrowings, ₹3,000.00 million for material subsidiaries to repay theirs, ₹2,030.00 million for construction equipment, and the rest for general purposes (DRHP p.25).

How fast it has grown: revenue from ₹6,185 million in FY23 to ₹9,211 million in FY24 and ₹11,530 million in FY25 (DRHP p.26).

The one thing to understand: fast growth paid for with borrowed money. In FY25 contract assets, work done but not yet billable, rose by ₹2,814.87 million, operating cash flow was negative ₹3,018.35 million and borrowings rose from ₹1,612 million to ₹4,841 million (DRHP p.26, DRHP p.79).

02The business, in plain words

A road contractor bids for government highway and bridge projects, builds them with its own equipment and subcontractors, and is paid in stages as work is certified; under HAM it also funds part of the build and is repaid over time.

NHAI tenders a highway stretch → Dhariwal wins the bid → it builds the road with its crews, equipment and subcontractors → NHAI certifies progress and pays against bills.

Subcontracting was 38.60% of total expenses in FY25 (DRHP p.47).

Earnings equation: Profit ≈ work executed × (contract price − materials, subcontract and equipment cost) − interest. EBITDA margin was 21.39% in FY25 (DRHP p.178).

03Where the money comes from

Source: DRHP p.27, DRHP p.39.

04The growth record

Source: DRHP p.26, DRHP p.79, DRHP p.178.

Our arithmetic on that record: revenue grew about 36.5% a year from FY23 to FY25 and profit after tax about 57.9% a year (our arithmetic, DRHP p.26). The company's own key indicators put net debt to EBITDA at 1.53 times in FY25 against negative figures in FY23 and FY24, and return on capital employed at 42.79% in FY23, 36.62% in FY24 and 24.64% in FY25 (DRHP p.178).

05What the growth is made of

New orders in new states. The order book rose from ₹22,440 million in FY23 to ₹47,670 million in FY25, 4.13 times FY25 revenue, including ₹16,467 million of HAM work (DRHP p.178). Revenue shifted from Assam to Bihar and Madhya Pradesh in FY25 (DRHP p.39).

06Earnings quality

Over FY23 to FY25, operating cash flow totalled negative ₹2,045.37 million against profit of ₹3,351.23 million (our arithmetic, DRHP p.26, DRHP p.79). Contract assets rose ₹1,051.42 million in FY24 and ₹2,814.87 million in FY25 (DRHP p.79). Net working capital rose from 8 days in FY23 to 32 days in FY25 (DRHP p.178). The document says it has had negative operating cash flows and may again (DRHP p.36).

07The balance sheet

Source: DRHP p.26, DRHP p.178. Trade receivables were ₹763.04 million at March 2025 (DRHP p.28).

08What the money is for

Source: DRHP p.25. A pre-IPO placement of up to ₹1,900 million may be made before the RHP (DRHP p.24). The material subsidiaries were still awaiting their lenders' consent to the issue (DRHP p.50).

09Who is selling

Nobody. The issue is a fresh issue only, of up to ₹9,500 million, with a portion reserved for employees (DRHP p.24).

10Promoters

The promoters are Chet Ram Dhariwal, chairman and managing director, Aditya Dhariwal, Chet Ram Dhariwal HUF, Saroj Dhariwal, Navita, Deepak Dhariwal and Mohinder Singh Dhariwal (DRHP p.24, DRHP p.27). Their average cost is about ₹2.7 a share (DRHP p.31). FY25 salaries included ₹96.00 million to Chet Ram Dhariwal, ₹84.00 million to Deepak Dhariwal, ₹48.00 million to Saroj Dhariwal, ₹30.00 million to Navita and ₹18.00 million to Aditya Dhariwal (DRHP p.28).

11Who already owns it

Source: DRHP p.25. The last row is our arithmetic. Promoters hold 99.63% in all (our arithmetic).

12What changed just before the IPO

• Order book: nearly doubled in FY25 (DRHP p.178).
• Borrowings: tripled in FY25 (DRHP p.26).
• Share capital: up from ₹26.43 million to ₹951.32 million, including a bonus issue (DRHP p.26).
• RoC penalties: ₹20,000 each on the company and directors after a self-filed application (DRHP p.27).
• Bonus issue: 35 equity shares for every 1 held, allotted 30 December 2024 at nil consideration, the last allotment before the issue (DRHP p.92).
• Auditor: no change in the statutory auditor in the three years before the filing (DRHP p.82).
• Public company: the company was incorporated as a public limited company in May 2016 (DRHP p.3).

13Capacity and expansion

Capacity is equipment, crews and bidding capacity. Gross block rose from ₹897.84 million in FY23 to ₹1,833.08 million in FY25, and the proceeds fund ₹2,030 million more equipment (DRHP p.25, DRHP p.178). Employees numbered 1,090 in FY25 (DRHP p.178).

14Market size and industry structure

The CRISIL report cited in the offer document says four-lane-and-wider roads rose from 28% of national highway construction in FY2019 to 44% in FY2025, and expects the construction industry to grow 6 to 8% a year from FY2026 to FY2030 (DRHP p.24). Those projections are CRISIL's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• One of the fastest-growing road builders, citing CRISIL (DRHP p.24).
• Work for BRO, including tunnels (DRHP p.24).

Against that: dependence on government contracts and competitive bids, on a few states, on HAM projects it has not yet completed, and on subcontractors (DRHP p.27, DRHP p.28, DRHP p.47).

16Peers the company named

Source: DRHP p.176. The table also lists H.G. Infra Engineering and PNC Infratech; the peers' P/E averages 11.08 (DRHP p.175, DRHP p.176).

No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Government. Almost the whole order book (DRHP p.27).
• Bihar. Half of FY25 revenue (DRHP p.39).
• Cash. Negative operating cash flow in FY25 (DRHP p.36).
• HAM. No HAM project completed yet (DRHP p.28).
• Fixed prices. Lump-sum contracts risk cost overruns (DRHP p.28).

18Litigation and regulatory matters

Source: DRHP p.27. The regulatory matter is RoC show-cause notices of September 2025 on a contravention of Rules 14(3) and 14(4) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, which the company and its managing director had reported themselves (DRHP p.27).

19Related-party transactions

Mainly promoter-family salaries and office rent (DRHP p.28). Promoter-family salaries in FY25 came to about ₹276.90 million (our arithmetic, DRHP p.28).

20What the offer document does not say

In the sections read for this study, the document does not give:

• Which HAM projects the subsidiaries hold, and how much equity they still need, in the pages read.
• When the contract assets will be billed, in the pages read.
• What the two criminal cases against the company allege, in the pages read.
• Why FY23 revenue relied less on competitive bidding, in the pages read.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Why did contract assets rise by ₹2.8 billion in FY25, and when will they be billed?
2. How much more equity will the HAM projects need after this issue?
3. How were FY23 contracts obtained, if 43% of revenue did not come through competitive bids?
4. How are promoter-family salaries of about ₹277 million set?
5. What happens to revenue if Bihar orders slow?

1Sources and cited facts

This study was read from 1 document the company filed. The 61 figures it cites are listed under the document each came from, with the page and the sentence as printed.