Shares of Dilip Buildcon Soar by 10% Amidst Winning ₹1,800 Crore LPG Pipeline Project

Shares of Dilip Buildcon witnessed a 10% rally on September 10 amidst the win of ₹1,800 crore LPG pipeline project between Paradip in Odisha and Raipur in Chhattisgarh. 

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The share price of the stock was seen trading at ₹429 as compared to its last day's closing price of ₹393, and further moved up to an intra-day high of ₹439.70. 

The sudden surge provided some respite from the weak run. Over the last one month, Dilip Buildcon shares fell by around 6% and declined by 12% since the start of the year. Further, in a span of three years, the stock has appreciated by 25%, whereas in five years, it declined by 19%. 

₹1,800 Crore Pipeline Project Drives the Rally 

The immediate trigger came from an exchange filing made on September 9. 

Dilip Buildcon received a Letter of Intent authorising it to lay, build, operate or expand an LPG pipeline between Paradip and Raipur. The project is valued at approximately ₹1,800 crore. 

The company will execute the project through a special purpose vehicle in which it will hold 100% equity. 

Construction is expected to be completed within 36 months. Once built, the pipeline will have an operating period of 25 years. 

Dilip Buildcon’s responsibilities will cover the design, financing, development, construction, operation and maintenance of the LPG pipeline infrastructure. The project remains subject to the necessary approvals, authorisations and regulatory clearances from the Petroleum and Natural Gas Regulatory Board. 

How Will the Pipeline Operate? 

The proposed infrastructure is intended to transport LPG to bottling plants operated by various oil marketing companies. 

The pipeline is expected to replace some of the existing road-based movement of LPG through tankers and reduce dependence on tanker transportation. 

It may also operate as a common carrier under the applicable PNGRB framework, allowing eligible oil marketing companies and other users to access its capacity. 

Revenue will come from the applicable Petroleum and Petroleum Products Pipeline Transportation Tariff charged for moving LPG through the pipeline. 

Dilip Buildcon’s role will be limited to developing and operating the pipeline and providing transportation services. It will not procure, trade, distribute or sell LPG, nor will it take on the commercial risks associated with LPG procurement and marketing. 

Dilip Buildcon to Divest Stake in Power Transmission SPV 

Alongside the LPG pipeline development, Dilip Buildcon announced another transaction on September 10. 

The company has signed definitive agreements to divest its stake in Mekhali Power Transmission Limited to Alpha Alternatives Fund Advisors LLP and/or its affiliates or funds managed by the firm. 

Mekhali Power Transmission is a special purpose vehicle developing an under-construction power transmission project with an estimated total cost of approximately ₹2,171 crore. 

The project involves the development, design and engineering of a 400-kilovolt substation power transmission project covering around 470 circuit kilometres in Karnataka’s Belagavi district. 

For Thursday’s trading session, however, attention remained firmly on the new ₹1,800 crore LPG pipeline project. The announcement pushed Dilip Buildcon shares as high as ₹439.70, marking a sharp move after the stock’s weaker performance over the past month and year-to-date.