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The initial public offering (IPO) of Garuda Construction and Engineering Ltd has witnessed strong investor interest, receiving over three times subscription on its second day. The IPO, which opened for public subscription on Tuesday, October 8, 2024, is set to conclude on October 10. The price band for the Rs 264-crore IPO has been fixed at Rs 82 to Rs 95 per share. By the second day, the IPO had received bids for 6,09,13,017 shares, compared to the 1,99,04,862 shares on offer, indicating a 3.06 times subscription.
The investor response across categories has been varied. Non-institutional investors have subscribed 1.80 times, while retail individual investors (RIIs) have shown strong interest, subscribing 5.48 times. However, the qualified institutional buyers (QIB) category has received a minimal 2% subscription. Despite the overall oversubscription, the ‘grey market premium’ (GMP) has settled at zero, indicating no potential listing gains for investors. This is a significant change from the first day of the IPO, where the GMP stood at Rs 5.
Several brokerages have given a ‘subscribe’ recommendation to the IPO, particularly for long-term investment. Anand Rathi, in its IPO note, believes the company is fully priced, valuing it at a P/E of 24.28 times and a market cap of Rs 884 crore post-issue. They highlight Garuda’s strong track record in executing construction projects and its increasing order book. Swastika Investmart, while recommending the IPO to “high-risk investors”, also acknowledges the company's strong order book and project diversification. However, they note that the FY24 performance was sluggish due to the election year.
Stoxbox emphasizes Garuda’s debt-free status and its impressive order book worth Rs 1,408 crores, which is 9.2 times its sales. They also highlight the company’s impressive revenue and profit growth, with revenue doubling to Rs 154.2 crore in FY24 and profit after tax growing to Rs 36.4 crores. The company’s financial performance and positive outlook have contributed to the optimistic recommendations from analysts. Garuda Construction and Engineering is a mix of fresh issue of 1.83 crore equity shares and an offer of sale (OFS) of 95 lakh equity shares by promoter PKH Ventures. The IPO proceeds will be utilized for working capital requirements and general corporate purposes, including possible inorganic acquisitions.
Source: Garuda Construction IPO Day 2: Check Subscription Status, GMP Today