Garuda Construction and Engineering is set to become the first main board IPO for October 2024. Garuda Construction and Engineering, founded in 2010, provides comprehensive construction services for residential, commercial, residential/commercial, infrastructure, and industrial projects, as well as additional services for infrastructure and hospitality projects. Here are the all key details you need to know about this IPO:
IPO details The IPO of Garuda Construction and Engineering shall remain open for between Tuesday, October 8, and Thursday, October 10, The EPC player company will be offering its shares in the fixed price band of Rs 92-95 apiece. Investors can apply for a minimum of 157 equity shares and its multiples thereafter.
The Rs 264.10 crore IPO of Garuda Construction and Engineering includes a fresh share sale of 1.83 crore equity shares worth Rs 173.85 crore and an offer-for-sale (OFS) of up to 95 lakh equity shares by its promoter PKH Ventures amounting to Rs 90.25 crore. Anchor book for the issue shall be announced later on Monday, October 7.
Utilization of funds The net proceeds from the issue shall be utilized towards funding working capital requirements, unidentified inorganic acquisitions and general corporate expenses, while the proceeds from the OFS shall go to the selling shareholder. It will command a total market capitalization of 884 crore.
Business profile & financials Garuda Construction also provides services such as operation and maintenance (O&M) and mechanical, electrical and plumbing (MEP) services as well as finishing works as part of construction services. The order company had an order book of 1,408.27 crore as of September 28, 2024.
The company reported a net profit of Rs 3.5 crore with a revenue of Rs 11.88 crore for the month of April 30, 2024. It reported a net profit of Rs net profit of Rs 36.44 crore with a revenue of Rs 154.47 crore in the previous fiscal year. It has cited PSP Projects, Ahluwalia Contracts, Capacite Infraprojects as the key peers.
Grey market premium The grey market premium for Garuda Construction and Engineering has taken a severe hit amid the rising selloff at Dalal Street, particularly in the broader markets. The company was commanding a grey market premium (GMP) of merely Rs 10 per share, suggesting a listing pop of 11 per cent to the investors. However, the GMP stood at Rs 22 during the weekend.
Allocation and listing Garuda Construction and Engineering has reserved 50 per cent of the net offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) have 15 per cent of the allocation. Retail investors will get the remaining 35 per cent of the net offer.
Corpwis Advisors is the sole book running lead manager of the Garuda Construction and Engineering IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with October 15, Tuesday as the tentative date of listing.
Brokerage reviews Garuda construction order book stood at Rs 1,400 crore shows business visibility. It is focused on operating the remaining asset light model, high margin projects and increasing the market presence. The company has also constructed some marquee projects like the Delhi Police HQ and Golden chariot hotel in Mumbai which showcase their execution capabilities, said Arihant Capital.
"At the upper price band, the issue is priced at a P/E of 24.24 times post issue based on the FY24 post issue EPS of INR 3.92. We have a 'subscribe for listing gains' rating for the issue," said the brokerage firm in its IPO note.
Garuda Construction is well-positioned in the rapidly growing Indian construction sector. Its asset-light business model, which relies on third-party subcontractors for equipment and labour, combined with its focus on geographic expansion beyond the MMR region into states like New Delhi, Karnataka, and Rajasthan, enhances its ability to scale operations efficiently, said SMIFS.
"Garuda’s superior financial performance, including an industry-leading ROE and ROCE of 36.14 per cent and 46.69 per cent in FY24, as well as its almost debt free status, makes it stand out among its peers, ensuring that it is well-positioned to capture new opportunities in the Indian construction market," it added with a 'subscribe' rating for the issue.