Shares of Garuda Construction and Engineering Ltd. made a notable debut on the stock market on October 15, 2024, listing at ₹105 per share on the National Stock Exchange (NSE), reflecting a 10.5% premium over its issue price of ₹95. This positive performance comes despite earlier expectations of a subdued listing due to a flat grey market premium leading up to the debut. On the Bombay Stock Exchange (BSE), the shares opened at ₹103.20, indicating an 8.63% gain over the IPO price.
The company’s IPO, which raised ₹264 crore, was launched for subscription between October 8 and October 10, 2024, and saw an overwhelming response, being subscribed 7.55 times overall. Retail individual investors were particularly enthusiastic, with their segment oversubscribed by 10.81 times. Non-institutional investors also showed strong interest, subscribing 9.03 times, while qualified institutional buyers participated at a rate of 1.24 times.
The IPO consisted of a fresh issue worth ₹173.85 crore and an offer for sale component valued at ₹90.25 crore from promoter PKH Ventures. Prior to the public offering, Garuda Construction secured ₹75 crore from anchor investors on October 7, 2024.
Main Points
Garuda Construction Financial Performance
Garuda Construction has shown robust financial growth in recent years. For the fiscal year ending March 2024, the company reported a net profit of ₹36.4 crore, up from ₹18.8 crore in fiscal 2022, marking a compound annual growth rate (CAGR) of 25%. Revenue from operations also increased significantly, climbing to ₹154.2 crore from ₹77 crore, achieving a CAGR of 26% during the same period.
Garuda Construction Market Insights
Analysts attribute the strong listing performance to Garuda’s diversified project portfolio and solid order book, which provide stability in revenue generation despite potential market volatility. The construction sector in India has been growing steadily, and Garuda is well-positioned within this expanding market.
Shivani Nyati, Head of Wealth at Swastika Investment Ltd., noted that while investors may see modest gains from this IPO, they should remain cautious and consider setting a stop loss around the issue price to protect against potential fluctuations in market performance.
Garuda Construction Utilization of Funds
The proceeds from the IPO are intended for various purposes:
- Approximately ₹100 crore will be allocated for working capital requirements.
- The remaining funds will be used for general corporate purposes, including potential acquisitions.
Garuda Construction Future Outlook
Despite facing some challenges in FY24 due to an election year leading to a slowdown in revenue and profit growth, Garuda Construction remains optimistic about its future projects and market position. The company offers a range of construction services across multiple sectors including residential, commercial, infrastructure, and industrial projects.
Conclusion
Garuda Construction’s successful market debut is a positive indicator for both the company and investors looking for opportunities in India’s growing construction sector.
