Garuda Construction and Engineering Ltd has officially made its debut in the primary market as of October 8, 2023. This company, specializing in comprehensive civil construction services, successfully raised ₹75 crores from anchor investors ahead of its highly anticipated initial public offering (IPO).
The IPO has been priced within a range of ₹92 to ₹95 per share, with the overall valuation of this share sale amounting to ₹264.10 crore. Investors interested in this offering can participate in the initial share sale starting today (October 8, 2023) until Thursday, October 10, 2023. The minimum lot size for this issue is 157 equity shares, with additional shares available in multiples of 157.
Garuda Construction’s IPO aims to cater to a diverse investor base, with 50% of the total issue size allocated to qualified institutional buyers, while retail investors are assigned 35%. The remaining 15% is reserved for non-institutional investors. Interested parties need to bid for a minimum of 157 equity shares.
Garuda Construction and Engineering is involved in full-service civil construction covering a wide array of projects, such as residential complexes, commercial offices, hotels, and critical infrastructure. Their services extend to erecting concrete and composite steel structures essential for various civil projects, catering to sectors like commerce, industry, and hospitality.
According to the red herring prospectus (RHP), Garuda’s listed peers include several notable companies such as PSP Projects Ltd with a P/E ratio of 20, Capacite Infraprojects Ltd at 23.61, Vascon Engineers Ltd at 22.66, Ahluwalia Contracts (India) Ltd at 22.97, and B L Kashyap & Sons Ltd, which holds a P/E of 48.67.
The revenue from operations for Garuda Construction surged from ₹77.02 crore in fiscal year 2022 to ₹154.18 crore in fiscal year 2024, marking a substantial Compound Annual Growth Rate (CAGR) of 26%. Additionally, the company’s profit after tax climbed from ₹18.78 crore in fiscal 2022 to ₹36.43 crore in fiscal 2024, reflecting a CAGR of 25%.
Garuda Construction IPO Subscription Status
The Garuda Construction IPO subscription for the public offering is set to commence at 10:00 IST during Tuesday’s trading hours.
Garuda Construction IPO Review
Arihant Capital Markets Ltd
As per a brokerage report from Arihant Capital Markets, Garuda Construction holds an impressive order book valued at ₹14 billion, which translates approximately to 9 times the revenue for FY24. This reflects strong business visibility for the company moving forward. The construction firm aims to uphold an asset-light model while focusing on high-margin projects and expanding its market presence. They’ve successfully completed several high-profile projects such as the Delhi Police HQ and the Golden Chariot Hotel in Mumbai, illustrating their execution capabilities. With the upper price band set at ₹95, the IPO is assessed at a P/E ratio of 24.24 based on a post-issue EPS of ₹3.92. The brokerage has given the offering a “Subscribe for listing gains” recommendation.
Swastika Investmart Ltd
According to Swastika Investmart Ltd, the brokerage firm’s evaluation highlights Garuda’s robust order book alongside its diverse project portfolio as key strengths. While the PE ratio aligns with industry standards, its return on net worth surpasses that of many peers. A notable growth was observed in FY23, although FY24 may witness a slowdown attributed to the election year. Given the cyclicality of the business, investors with a higher risk appetite might see this IPO as a viable opportunity for potential long-term growth.
Garuda Construction IPO Details
The Garuda Construction and Engineering IPO comprises 1.83 crore new equity shares along with an offer for sale of 95 lakh equity shares by the promoter, PKH Ventures Ltd.
The proceeds from the fresh issue are earmarked to address working capital needs and other corporate requirements, including potential inorganic acquisitions.
Corpwis Advisors Private Ltd has been appointed as the sole book running lead manager for this issue, while Link Intime India Private Ltd serves as the registrar.
Garuda Construction IPO GMP Today
Currently, Garuda Construction and Engineering’s IPO grey market premium (GMP) stands at +22, indicating that shares of Garuda Construction were trading at a premium of ₹22, based on grey market data from investorgain.com.
Based on the upper end of the IPO price band and the prevailing grey market premium, the estimated listing price for Garuda shares is projected to be around ₹117 per share, representing a 23.16% increase from the IPO price of ₹95.
Today’s IPO GMP suggests a strong market reception, as indicated by ongoing grey market activities over the last eight sessions. The GMP fluctuates from ₹0 to ₹22, according to market experts.
The ‘grey market premium’ reflects investors’ willingness to pay above the issue price, signaling confidence in the stock’s anticipated performance.
Disclaimer: The opinions and recommendations shared above are those of individual analysts and brokerage firms, and do not represent the views of the publication. It is advisable for investors to seek advice from certified professionals before making any investment decisions.
