Garuda Construction IPO Day 2: Subscription Status, GMP, Key Details, and Should You Invest?

Garuda Construction IPO Overview

The Garuda Construction and Engineering IPO started strong, with lots of interest from retail and non-institutional investors (NIIs). However, participation from Qualified Institutional Buyers (QIBs) has been limited.

On October 7, the company raised ₹75 crore from anchor investors. The IPO price is set between ₹92-95 per share, aiming to raise a total of ₹264 crore. It opened for subscription on October 8 and will close on October 10.

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Subscription Details

• QIBs: 50% of the issue
• Retail investors: 35%
• NIIs: 15%
• Minimum bid: 157 equity shares, with additional bids in multiples of 157.

Garuda Construction provides civil construction services for various projects, including residential, commercial, and infrastructure. Their work involves constructing concrete and steel structures for different uses, such as housing and hotels.

Financial Performance

According to their red herring prospectus (RHP), Garuda’s listed peers include:

• PSP Projects Ltd (P/E: 20)
• Capacite Infraprojects Ltd (P/E: 23.61)
• Vascon Engineers Ltd (P/E: 22.66)
• Ahluwalia Contracts (India) Ltd (P/E: 22.97)
• B L Kashyap & Sons Ltd (P/E: 48.67)

Garuda’s revenue from operations grew from ₹77.02 crore in fiscal 2022 to ₹154.18 crore in fiscal 2024, showing a 26% annual growth rate. Profit after tax also rose from ₹18.78 crore in fiscal 2022 to ₹36.43 crore in fiscal 2024, reflecting a 25% growth rate.

Subscription Status Update

As of the first day of the IPO, Garuda Construction’s offer was subscribed 1.91 times:

• Retail investors: Oversubscribed by 3.43 times
• Non-institutional investors: 1.10 times
• QIBs: 2% subscribed

Expert Recommendations

BP Equities Pvt Ltd: The brokerage praises Garuda for successfully completing various projects and highlights the construction sector’s importance to India’s economy. With impressive sales growth and a strong order book worth ₹1,408 crore (9.2 times its sales), they recommend a “SUBSCRIBE” rating for long-term investment, given the reasonable Price-to-Earnings (P/E) ratio of 19.5x based on FY24 earnings.

Stoxbox: They also recommend subscribing to the IPO, noting the company’s improved financial position, including being debt-free in FY23 and having a solid order book.

IPO Details

The Garuda Construction IPO includes 1.83 crore new equity shares and an offer for sale of 95 lakh shares by promoter PKH Ventures Ltd. Funds raised will be used for operational needs and potential acquisitions.

Grey Market Premium (GMP)

As of today, the Garuda Construction IPO GMP is +5, indicating the shares are trading at a ₹5 premium in the grey market. This suggests an estimated listing price of ₹100 per share, which is about 5.26% higher than the upper IPO price of ₹95. However, the current GMP shows a downward trend, with a range from ₹0 to ₹22 over the last nine sessions. The grey market premium reflects investors’ willingness to pay more than the issue price.