Garuda Construction IPO Receives Mixed Investor Response

The initial public offering (IPO) of Garuda Construction and Engineering drew noteworthy attention from retail and high net-worth individual (HNI) investors on its opening day, according to stock exchange data. While the IPO managed to gather bids for 3,01,48,867 equity shares, equating to 1.51 times the 1,99,04,862 shares on offer by 2:45 PM on October 8, the allotments for qualified institutional buyers (QIBs) remained unsubscribed.

Garuda Construction and Engineering aims to raise Rs 264.10 crore through the IPO by offering shares priced between Rs 92 to Rs 95, with investors required to apply for a minimum of 157 shares. The total includes a fresh share issuance topping Rs 173.85 crore and promoter PKH Ventures’ offer-for-sale of up to 95 lakh shares. Subscription for the IPO concludes on October 10.

The Mumbai-based company, founded in 2010, provides extensive services across residential, commercial, infrastructure, and industrial sectors. Recent reports indicate a reduction in the grey market premium (GMP) for Garuda’s shares to Rs 5, down from Rs 22 earlier, suggesting a modest listing gain for early investors.

The IPO received a positive reception from brokerage firms that lauded Garuda’s diversified project portfolio and robust order book. However, analysts expressed concerns over the firm’s sluggish financial performance, cyclical market exposure, and negative cash flows. Canara Bank Securities highlighted these aspects, advising caution and issuing an ‘avoid’ rating.

Preceding the IPO, Garuda secured Rs 75 crore from anchor investors by distributing 78,95,138 shares at Rs 95 each. The net offer divides allocations to half for QIBs, 15 percent for NIIs, and 35 percent for retail investors, with shares set to list on BSE and NSE on October 15.

Corpwis Advisors functions as the sole book running lead manager for the offering, with Link Intime India as registrar. The company reported a net profit of Rs 3.5 crore with earnings of Rs 11.88 crore by April 30, 2024, reflecting its fiscal performance complexities.