Dilip Buildcon shares rally 12% on bagging Rs 1,800 crore LPG pipeline project

Dilip Buildcon shares rallied 11.88% in early trade on Thursday, hitting a day’s high of Rs 439 on the NSE, after the company received a letter of intent (LOI) to lay, build, operate or expand an LPG pipeline from Paradip in Odisha to Raipur in Chhattisgarh.

According to a filing with the exchange, the company said that the Project Authority is Petroleum and Natural Gas Regulatory Board (PNGRB) and this 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.

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The operation period by which the order(s) / contract(s) is to be executed is 25 years and the execution period is of three years.

The project shall be implemented through a Special Purpose Vehicle (SPV), in which Dilip Buildcon shall hold 100% equity. The Engineering, Procurement and Construction (EPC) works are proposed to be awarded to DBL, representing a business opportunity.

This project is valued at approximately Rs 1800 crore (excluding GST) and is to be executed over a period of 36 months.
Under the proposed project, Dilip Buildcon will undertake the design, finance, development, construction, operation and maintenance of the proposed LPG pipeline infrastructure, subject to applicable approvals, authorisations and regulatory requirements of the Petroleum and Natural Gas Regulatory Board.The proposed pipeline infrastructure will facilitate the transportation of LPG to the bottling plants of various Oil Marketing Companies (OMCs), thereby intending, replacing the existing road-based transportation of LPG through tankers and enhancing road safety.

The company further said that 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.

This project will generate revenue through the applicable petroleum and petroleum products pipeline transportation tariff for transportation of LPG through the pipeline.

Accordingly, Dilip Buildcon’s role through SPV will be to develop and operate the LPG pipeline infrastructure and provision of transportation services and to clarify the matter, Dilip Buildcon 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.

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Dilip Buildcon share price movement

In the last one month, the stock was down 5.21%. The stock is down 11.44% in the current calendar year so far and 14% in the last one year. The stock gained 25.92% in the last three years and fell 17.98% in the last five years.

Disclosure: This article has been written by Surbhi Khanna, who is not a SEBI-registered Research Analyst or an investment advisor . Surbhi Khanna does not hold any financial interest in Economic Times as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of the EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.