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Garuda Construction's initial public offering (IPO) has finally reached its listing day on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The IPO was subscribed 7.55 times, with strong interest from both retail and non-institutional investors. However, the grey market premium (GMP) for the shares has remained at zero since October 9, indicating a potential for a flat or even negative listing. GMP reflects the premium investors are willing to pay for shares before they are listed, so a zero GMP suggests a lack of enthusiasm in the market.
Despite the lackluster GMP, analysts remain cautiously optimistic about Garuda Construction's prospects. The company's strong order book and project diversification provide a stable revenue stream, and its return on net worth is superior compared to its peers. However, the cyclical nature of the infrastructure industry and the potential impact of market volatility need to be considered. While the IPO's valuation is deemed reasonable, investors should be prepared for short-term losses given the current market conditions.
Several brokerages have recommended subscribing to the IPO, citing the company's strong track record and its focus on civil construction with a visible growth trajectory. Notably, the company's revenue and profit have shown impressive annual growth rates, and it has successfully executed a diverse mix of construction projects. While some analysts advise caution due to the sluggishness in the construction sector, they believe that Garuda Construction's solid fundamentals and long-term growth potential make it a worthwhile investment for those with a higher risk tolerance.
Source: Garuda Construction IPO Listing Tomorrow: What Does Latest GMP Indicate?