The initial public offering (IPO) of Garuda Construction and Engineering continued to see a mixed response from the investors during the third and final day of the bidding process as institutional investors kept off the bidding. The issue was booked 1.9 times by the end of day one and ended day two with more than 4 times subscription.
Garuda Construction and Engineers is selling its shares in the price band of Rs 92-95 apiece. Investors can apply for a minimum of 157 shares and its multiples thereafter. It is looking to raise Rs 264.10 crore via IPO, which includes a fresh share sale of 173.85 crore and an offer-for-sale of up to Rs 95 lakh shares by its promoter PKH Ventures.
According to the data, the investors made bids for 12,67,88,961 equity shares, or 6.37 times, compared to the 1,99,04,862 equity shares offered for the subscription by 2.30 pm on Thursday, October 10. The three-day bidding for the issue, which kicked off on Tuesday, October 8, concludes today.
The allocation for retail investors was subscribed 9.75 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 6.12 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was booked 1.08 times as of the time.
Mumbai-based 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.
The grey market premium (GMP) for the Garuda Construction and Engineering has seen a sharp correction following a muted response from QIBs. Last heard, the company was commanding no premium in the unofficial market, suggesting a negligible listing pop for the investors. The premium in the unofficial market stood at Rs 22 before the bidding kicked off.
Brokerage firms, largely have a positive view on the issue and suggest subscribing for a long term citing its diversification, strong order book, better return ratios. On the other hand, sluggish financial performance, cyclical nature of business and negative cash flows are the major concerns for the issue.
The company has a strong order book and project diversification are key strengths of the business. The PE ratio is in line with industry peers, but the return on net worth is superior. FY23 saw strong growth in revenue and profit, while FY24 was sluggish due to the election year, said Swastika Investmart suggesting high risk investors can consider applying to the IPO for the long-term.
Ahead of its IPO, Garuda Construction raised Rs 75 crore from seven anchor investors as it allocated 78,95,138 shares for Rs 95 per share. The company 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.
Garuda Construction reported a net profit of Rs 3.5 crore with a revenue of Rs 11.88 crore for the month of April 30, 2024. The company reported a net profit of Rs net profit of Rs 36.44 crore with a revenue of Rs 154.47 crore for the financial year ended on March 31, 2024.
Garuda Construction's primary focus is civil construction of residential and commercial buildings with a track record of successfully executing a diverse mix of construction projects, that is, with visible growth through increasing order book and strong project management and execution capabilities to finish projects on schedule with high construction quality, said Anand Rathi Research.
"At the upper price band, the company is valuing at P/E of 24.28 times, with a market cap of Rs 884 crore post issue of equity shares and return on net worth of 36.14 times. We believe that the IPO is fully priced and recommend a 'subscribe for long term' rating to the IPO," it added.
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.