Shares of Garuda Construction and Engineering are to make their Dalal Street debut on Tuesday. The company is headed for a muted listing on the bourses, if one goes by the signals from the unofficial market. The grey market premium (GMP) has been dwindling since the close of issue.
Shares of Garuda Construction and Engineering may debut on tepid note or even at discount as its grey market premium (GMP) has seen a sharp correction following a muted response from investors. Last heard, the company was commanding no premium in the unofficial market, suggesting a negligible listing pop for the investors.
Garuda Construction and Engineering the grey market premium is currently indicating no immediate listing gains for the investors, said Sagar Shetty, Research Analyst at StoxBox. "However, given its financial performance and expansion into high-growth segments, investors allotted shares are advised to consider holding their positions from a medium to long-term," he said.
The IPO of Garuda Construction and Engineering was open for bidding between October 08 and October 10. The company had offered its shares in the fixed price band of Rs 90-95 per share with a lot size of 157 shares. It raised a total of Rs 264.10 crore from its IPO, which included a fresh share sale of Rs 173.85 crore and offer-for-sale (OFS) of up to 95 lakh equity shares.
The issue was overall subscribed merely 7.55 times during the three-day bidding process. The allocation for retail investors was booked 10.81 times. The quota for non-institutional investors(NIIs) was subscribed 9.03 times. The portion reserved for qualified institutional bidders (QIBs) investors saw bidding for only 1.24 times.
Garuda Construction and Engineering's IPO received a decent subscription but currently the grey market premium is indicating a potential for a flat or even negative listing, said Shivani Nyati, Head of Wealth, Swastika Investmart. While the company's financial performance was robust in FY23, the election year in FY24 led to a slowdown in revenue and profit growth, she said.
"The IPO's valuation was reasonable, but investors should carefully consider the cyclical nature of the industry and the potential impact of market volatility on the company's performance. A flat or negative listing is a possibility, and investors should be prepared for short-term losses," Nyati added.
Founded in 2010, Garuda Construction and Engineering provides comprehensive construction services for residential, commercial, residential/commercial, infrastructure, and industrial projects, as well as additional services for infrastructure and hospitality projects.
Brokerage firms mostly had a positive view on the issue. Corpwis Advisors was the sole book running lead manager of the Garuda Construction and Engineering IPO, while Link Intime India served as the registrar for the issue. Shares of the company shall be listed on both BSE and NSE.