Garuda Construction IPO Surges with 6x Subscription on Day 3; Retail Investors Lead the Charge with 9.4x Interest – Check GMP and Details

Garuda Construction and Engineering’s IPO received a strong response, with the issue being subscribed 6 times by the third day. Retail investors showed the most interest, subscribing to the issue 9.4 times.

By 2 pm on the final day, retail investors had bid for 9.14 crore shares against the 97.3 lakh shares reserved for them. Non-institutional investors (NIIs) subscribed 5 times, while qualified institutional buyers (QIBs) subscribed 108%.

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Garuda Construction IPO Details

The IPO consists of a fresh equity issue worth ₹173 crore and an offer for sale (OFS) of ₹90 crore. Of the total, 50% is reserved for QIBs, 35% for retail investors, and 15% for NIIs. The price range for the IPO is set between ₹92 and ₹95 per share, with a lot size of 157 shares.

GMP (Grey Market Premium)

Analysts have reported that the grey market premium (GMP) for Garuda Construction’s IPO is ₹10, up from ₹5 on Day 2. This suggests a 10.5% premium over the issue price.

IPO Review

Experts recommend subscribing to the IPO due to Garuda Construction’s strong order book and asset-light business model. The company’s order book stands at ₹1,400 crore. The firm has successfully completed major projects, such as the Delhi Police Headquarters and the Golden Chariot Hotel in Mumbai, showcasing its expertise. At the top price band of ₹95 per share, the IPO is valued at a P/E ratio of 24.24x based on FY24 earnings, with an EPS of ₹3.92. Arihant Capital has given a “Subscribe for listing gains” rating.

Other Information

The fresh issue proceeds will primarily be used to meet working capital needs and for general corporate purposes, including potential acquisitions.

Garuda Construction provides civil construction services for various projects, including residential, commercial, and infrastructure developments. The company also offers additional services for infrastructure and hospitality projects.

India’s construction sector has grown at a compound annual growth rate (CAGR) of 10.6% from FY18 to FY23, reaching ₹3.9 lakh crore. It is expected to grow to ₹6.49 lakh crore by FY30 at a CAGR of 7.5%.

For the fiscal year ending March 2024, Garuda Construction’s revenue from operations dropped 4% year-on-year to ₹151 crore, and its profit after tax fell to ₹36.43 crore from ₹40.79 crore the previous year.

Corpwis Advisors is the lead manager for the IPO, while Link Intime India is handling the registration.