Garuda Construction and Engineering to Launch IPO Amid Positive Market Sentiment

The initial public offering (IPO) of Garuda Construction and Engineering is slated to open for public subscription on Tuesday, October 8, 2024. The company, recognized for its comprehensive civil construction services, aims to raise Rs 264.10 crore through this IPO.

Garuda Construction offers services across various sectors including residential, commercial, infrastructure, and industrial projects. In recent financial years, the company has reported significant growth, with revenue increasing from Rs 7,702.08 lakhs in fiscal 2022 to Rs 15,417.83 lakhs in fiscal 2024, marking a Compound Annual Growth Rate (CAGR) of 26.03%. Similarly, profit after tax rose from Rs 1,878.22 lakhs to Rs 3,643.53 lakhs, indicating a CAGR of 24.72%.

The IPO will consist of a fresh issue of 18.3 million shares and an offer for sale of 9.5 million shares. Investors can purchase shares at a price band set between Rs 92 and Rs 95, with the minimum lot size being 157 shares. Anchor investors are set to receive allocations on October 7, just a day before the public offering commences.

Proceeds from the IPO will primarily serve to bolster the company’s working capital requirements and support potential future acquisitions. The subscription for the IPO will close on Thursday, October 10. The allotment of shares is expected to be finalized by October 11, and shares will be credited to investors’ demat accounts on October 14, with trading anticipated to commence on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on October 15.

According to the red herring prospectus, Garuda Construction lists several industry peers, including Capacite Infraprojects Ltd and Ahluwalia Contracts (India) Ltd. The company’s operational profit margin in FY23 is reported at a leading 34.80%, significantly higher than the peer average of 16.90%, based on insights from the CareEdge Report.

Market analysts, like those from Arihant Capital Markets, have expressed optimism regarding the IPO, citing Garuda’s Rs 1,400 crore order book, its asset-light business model, and high-margin projects as key factors supporting a positive outlook. A notable construction portfolio includes projects such as the Delhi Police HQ and the Golden Chariot hotel in Mumbai. The experts recommend subscribing to the IPO for potential listing gains.

The Grey Market Premium (GMP) for Garuda Construction shares stands at Rs 22, implying strong demand and trading activity in the unlisted market, which translates to a premium of 23% over the upper end of the IPO pricing.

Corpwis Advisors Private Ltd is serving as the sole lead manager for the issue, with Link Intime India Private Ltd acting as the registrar. The IPO has a structured reservation allocation, dedicating 50% for qualified institutional buyers, 15% for non-institutional investors, and 35% for retail investors.