Shares of Garuda Construction and Engineering made their debut on the stock exchanges today, October 15, 2024. The company’s Initial Public Offering (IPO) was well-received, with a subscription rate of 7.55 times by the closing date on October 10, 2024. However, the grey market premium (GMP) indicated a muted listing.
Main Points
IPO Overview
Garuda Construction launched its IPO with a price band set between ₹92 and ₹95 per share. The total issue size was ₹264.10 crores, comprising a fresh issue of ₹173.85 crores and an offer for sale worth ₹90.25 crores. The lot size for retail investors was set at 157 shares, requiring a minimum investment of ₹14,915.
Subscription Details
The IPO attracted significant interest from retail investors, who subscribed to the portion allocated for them by 10.81 times. Non-Institutional Investors (NIIs) followed closely with a subscription rate of 9.03 times, while Qualified Institutional Buyers (QIBs) subscribed only 1.24 times their allocation. This strong demand indicated robust investor confidence despite recent market volatility.
Listing Performance
On its listing day, Garuda Construction shares opened at ₹103.20 on the BSE, reflecting an 8.63% premium over the upper end of the IPO price band. On the NSE, shares debuted at ₹105, marking a 10.52% premium. This performance defied earlier expectations based on grey market trends that suggested a flat or subdued debut.
Grey Market Premium Trends
Before listing, the grey market premium had dropped significantly, indicating a lackluster reception in unofficial trading circles. The GMP had fallen from around ₹5 to flat as the IPO approached its listing date. Analysts noted that this trend could suggest limited immediate gains for investors.
Important Price Levels
Investors should keep an eye on key price levels:
- Support Level: ₹95 (the upper limit of the IPO price band)
- Resistance Level: ₹110 (a psychological barrier following the initial listing)
Expected Price Performance
Market analysts predict that Garuda Construction’s stock may experience volatility in the short term due to mixed signals from the grey market and investor sentiment. However, given its strong order book and diversification into high-growth sectors like transportation and energy, long-term prospects remain positive.
Company Background
Garuda Construction and Engineering is a significant player in India’s infrastructure sector, specializing in civil construction services across various domains such as residential and industrial projects. For the fiscal year ending March 2024, the company reported revenues of ₹154.18 crores and a net profit of ₹36.44 crores. The funds raised from the IPO will primarily be used for working capital needs and potential acquisitions to fuel future growth.
Market Reactions
Brokerages have given mixed reviews regarding Garuda Construction’s IPO performance. While some highlight its strong fundamentals and potential for growth, others caution about its previous financial performance and reliance on internal contracts. Investors are advised to consider holding their shares for medium to long-term gains based on the company’s strategic expansion plans.
Summary of Key Points
- IPO Price Band: ₹92-₹95 per share.
- Total Issue Size: ₹264.10 crores.
- Subscription Rate: 7.55 times.
- Listing Price: Opened at ₹103.20 on BSE; ₹105 on NSE.
- Grey Market Premium: Flat before listing.
- Support Level: ₹95; Resistance Level: ₹110.
This detailed overview provides insights into Garuda Construction’s current market status and expected price performance following its IPO debut.
Disclaimer: The information given in this article is from investment experts and brokerage companies, they do not represent Local Haryana. Before taking any investment related decision, you must consult a certified expert.
