Garuda Construction IPO Set to Open on October 8: 10 Key Things You Need to Know Before Subscribing

The IPO for Garuda Construction and Engineering Ltd will open on October 8 and close on October 10. The company has set a price range of ₹92-95 per share for the ₹264-crore issue. The IPO includes a fresh issue of 1.83 crore equity shares and an Offer for Sale (OFS) of 95 lakh shares by promoter PKH Ventures.

At the upper end of the price range, the total IPO size will be ₹264 crore.

Of the fresh funds raised, ₹100 crore will be used for working capital needs, while the remaining money will go towards general corporate purposes, which could include acquisitions.

Investor Allocation:

• 50% of the IPO is reserved for qualified institutional buyers.
• 35% is for retail investors.
• The remaining 15% is for non-institutional investors.

Investors can bid for a minimum of 157 shares and in multiples of 157 after that.

Here are 10 key points from the Red Herring Prospectus (RHP) to know before you consider subscribing:

1. Promoters

The company’s promoters include Pravinkumar Brijendra Kumar Agarwal, PKH Ventures Ltd, and Makindian Township Private Ltd.

2. Shareholding Pattern

This outlines the percentage ownership held by promoters and other shareholders before and after the IPO.

3. Competitors

Garuda Construction’s competitors include:

• PSP Projects Ltd (P/E of 20.0)
• Capacite Infraprojects Ltd (P/E of 23.61)
• Vascon Engineers Ltd (P/E of 22.66)
• Ahluwalia Contracts (India) Ltd (P/E of 22.97)
• B L Kashyap & Sons Ltd (P/E of 48.6)

4. Business Overview

Founded in 2010, Garuda Construction offers services for residential, commercial, infrastructure, and industrial projects. They also provide operation & maintenance (O&M), mechanical, electrical, and plumbing (MEP) services, and finishing works.

5. Industry Growth

India’s manufacturing, mining, and construction sectors are growing quickly, supported by government initiatives and falling commodity prices. The industrial sector’s value is expected to grow 7.9%, reaching ₹48.9 trillion in FY24.

6. Order Book

As of September 28, Garuda’s order book for ongoing and upcoming projects stands at ₹1,40,827.44 lakhs, with 12 active projects. Seven of these projects have contract values over ₹10,000 lakhs each.

7. Group Companies

Garuda has 24 group companies involved in various activities.

8. Financial Performance

Garuda’s revenue fell by 4%, and profit after tax (PAT) dropped 11% from FY24 to FY23.

9. Major Customers

Garuda’s construction revenue for the year ending March 31, 2024 was ₹1,187.50 lakhs from four customers. In previous years, two to three customers contributed significant portions of revenue.

10. Key Risks

• Promoter Pravinkumar Brijendra Kumar Agarwal is involved in a criminal case, which may affect the company’s reputation.
• PKH Ventures previously filed an unsuccessful IPO that was withdrawn.

Lock-in Period for Anchor Investors

Anchor investors will have 50% of their shares locked in for 90 days and the other half locked in for 30 days after allotment.