Garuda Construction IPO: 23% GMP, Rs 1,400-cr order book; should you bid?

Garuda Construction IPO: The initial public offering (IPO) of construction company Garuda Construction and Engineering is scheduled to open for public subscription tomorrow. With the IPO, Garuda Construction seeks to raise Rs 264.10 crore. The public issue comprises a fresh issue of 18,300,000 shares and an offer for sale of 9,500,000 shares with a face value of Rs 5 each. 

Garuda Construction's IPO will be available at a price band of Rs 92-95, and a lot size of 157 shares. Accordingly, investors can bid for a minimum of 157 shares of Garuda Construction IPO and in multiples thereof. The minimum amount of investment required by retail investors is Rs 14,915.

The subscription window to bid for Garuda Construction will conclude on Thursday, October 10, 2024. Following that, the basis of allotment of Garuda Construction IPO shares is likely to be finalised on Friday, October 11, 2024, and subsequently, the company shares will be credited into demat accounts on Monday, October 14, 2024. Garuda Construction may tentatively list on the BSE and NSE on Tuesday, October 15, 2024.

Link Intime India is the registrar for Garuda Construction, while Corpwis Advisors is the sole book-running lead manager for the public issue.

That said, the unlisted shares of Garuda Construction are commanding decent premiums in the grey market ahead of its opening for public subscription for the IPO. Sources tracking grey market activities reveal that Garuda Construction unlisted shares were trading at a premium of Rs 22 against the upper end of the IPO price, which translates to a Grey Market Premium (GMP) of 23 per cent.

Garuda Construction seeks to utilise the net proceeds from the IPO for funding working capital requirements, general corporate expenses, and unidentified inorganic acquisitions.

Garuda Construction IPO review

Should you subscribe to the Garuda Construction IPO?

Arihant Capital Markets - Subscribe

Analysts at Arihant Capital Markets remain positive on Garuda Construction IPO and recommend that investors subscribe to the public issue for listing gains. According to the analysts, Garuda Construction's order book stood at Rs 1400 crore (9x of FY24 revenue), showing business visibility. 

The analysts highlighted that the company is focused on operating an asset-light model, high-margin projects, and increasing market presence.

The company has constructed marquee projects like the Delhi Police HQ and Golden Chariot hotel in Mumbai, showcasing their execution capabilities. According to the analysts, at the upper price band of Rs 95, the issue is priced at a P/E of 24.24x post-issue based on the FY24 post-issue EPS of Rs 3.92.

About Garuda Construction and Engineering

Garuda Construction and Engineering is an end-to-end civil construction services provider for residential, commercial, residential-cum-commercial, infrastructure, and industrial projects, along with additional services for infrastructure and hospitality projects. They also undertake construction of concrete building structures and composite steel structures required for civil construction and provide O&M, MEP services, and finishing works.