Garuda Construction and Engineering IPO: The initial public offering of Garuda Construction and Engineering Ltd, which was opened for public subscription on Tuesday, has so far received over five times subscription. The price band of the Rs 264-crore IPO has been fixed at Rs 82 to Rs 95 per share for the public issue. Till 12:25 pm on the final day of bidding on Thursday, the IPO received a 5.36 times subscription garnering bids for 10,66,74,592 shares as against the 1,99,04,862 shares on offer.
The category for non-institutional investors received 3.81 times subscription, while the portion for retail individual investors (RIIs) got subscribed 8.67 times. The QIB category received a 1.07 times subscription.
Garuda Construction and Engineering IPO: Key Dates
The Garuda Construction IPO will remain opened for public subscription between October 8 and October 10. The share allotment of the Garuda Construction and Engineering IPO will likely be finalised on October 11, while its shares will be listed on both BSE and NSE on October 15.
Garuda Construction and Engineering IPO: Price Band
The price band of the Rs 264.1-crore IPO has been fixed at Rs 92 to Rs 95 per share for the public issue.
Garuda Construction and Engineering IPO: GMP Today
According to market observers, unlisted shares of Garuda Construction and Engineering Ltd continue to trade at the same price as its issue price of Rs 20, thus zero GMP. The zero GMP indicates no listing gains from the IPO.
On the first day of the IPO on Tuesday, the GMP was Rs 5.
The GMP is based on market sentiments and keeps changing. ‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Garuda Construction and Engineering IPO: Analysts’ Recommendations
Most brokerages have given a ‘subscribe’ recommendation to the IPO.
Brokerage firm Anand Rathi in its IPO note said, “At the upper price band, the company is valuing at P/E of 24.28 times, with a market cap of Rs 884 crore post issue of equity shares and return on net worth of 36.14 times. We believe that the IPO is fully priced and recommend a ‘subscribe for long term’ rating to the IPO.”
It also said the company mainly focuses on civil construction of residential and commercial buildings with track record of successfully executing a diverse mix of construction projects, that is, with visible growth through increasing order book and strong project management and execution capabilities to finish projects on schedule with high construction quality.
Another brokerage Swastika Investmart, however, recommends this IPO to “high-risk investors” for the long term.
It said Garuda Construction and Engineering has a strong order book and project diversification are key strengths of the business. The PE ratio is in line with industry peers, but the return on net worth is superior. FY23 saw strong growth in revenue and profit, while FY24 was sluggish due to the election year.
Brokerage firm Stoxbox in its note said, “The company has reduced its debt & is debt-free. With an order book worth Rs 1,408 crores, which is 9.2 times its sales, and an IPO priced at a reasonable Price-to-Earnings (P/E) ratio of 19.5 times based on FY24 earnings, we recommend a ‘subscribe’ rating for this IPO from a long-term perspective.”
It added that Garuda Construction’s revenue doubled to Rs 154.2 crore in FY24, showing an impressive annual growth rate of 26 per cent. Its profit after tax also grew to Rs 36.4 crores in FY24, with an annual growth rate of 24.7 per cent. The average debt-to-equity ratio of other companies in the industry ranged between 0.23 times and 0.66 times during FY19-FY23.
Garuda Construction and Engineering IPO: More Details
The Garuda Construction and Engineering IPO is a mix of fresh issue of 1.83 crore equity shares and an offer of sale (OFS) of 95 lakh equity shares by promoter PKH Ventures.
The IPO size has been pegged at Rs 264 crore at the upper end of the price band.
Proceeds from its fresh issuance to the extent of Rs 100 crore will be utilised for working capital requirement; and balance towards general corporate purposes including unidentified inorganic acquisitions.
The Mumbai-based Garuda Construction is currently engaged in civil construction of six residential projects, two commercial projects, one industrial project and one infrastructure, with an order book of Rs 1,408.27 crore.
On financial front, the company’s revenue from operations rose from Rs 77.02 crore in FY22 to Rs 154.18 crore in FY24, at a Compound Annual Growth Rate (CAGR) of 26 per cent, and profit after tax increased from Rs 18.78 crore in FY22 to Rs 36.43 crore in FY24, at a CAGR of 25 per cent.
Corpwis Advisors is the sole book running lead manager and Link Intime India is the registrar of the issue.
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