This recently listed stock jumped 70% in 1 mth after going below IPO price

Shares of Garuda Construction and Engineering moved higher by 13 per cent to Rs 128.90, rallying 36 per cent in three days

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Garuda Construction and Engineering share price: Shares of Garuda Construction and Engineering moved higher by 13 per cent to Rs 128.90 on the BSE in Friday’s intra-day trade amid heavy volumes in an otherwise weak market. The stock of the civil construction company is trading higher for the third straight day, surging 36 per cent during the period.  Currently, Garuda Construction is trading 36 per cent higher over its issue price of Rs 95 per share. The company had made its stock market debut on October 15, 2024.

 

On November 22, the stock had hit a 52-week low of Rs 76.02, falling 20 per cent below its issue price. Since then, the market price of Garuda Construction has soared 70 per cent.

 

At 11:33 AM, the stock was trading 11 per cent higher at Rs 126.90, as compared to the 0.03 per cent decline in the BSE Sensex. A combined 9.34 million equity shares of the company have changed hands on the NSE and BSE.

 

The primary focus of Garuda Construction is civil construction of residential and commercial buildings and now they are venturing into industrial and infrastructural projects as well.

 

As on the date of filling Red Herring Prospectus, the contract value of their ongoing and upcoming projects amounted to a total of Rs 1,408.27 crore. With projects spread across the Mumbai Metropolitan Region (MMR), Arunachal Pradesh, Karnataka, Rajasthan and Punjab, the increasing number of construction work and projects help them maintain the momentum of their growth and enhanced reputation.

 

The company intends to become a multidisciplinary construction company offering a diversified range of construction and allied services across various industries by constructing institutional, government, industrial and residential projects in India. They also bring their experience of completing projects in the hospitality and government sector to the table. They intend to capitalise on this experience and expand their footprint in other sectors and industries as well in the future.

 

However, the company’s business and profitability are significantly dependent on the performance of the real estate market generally in India and particularly in the MMR. Varying market conditions in the MMR may affect their ability to ensure sale of their projects and the pricing of units in such projects, which may adversely affect their results of operations and financial condition, JM Financial Services had said in the company's IPO note.

 

Meanwhile, the construction sector plays a big role in India’s economy, being the second-largest contributor after agriculture. In FY23, it made up 8.4 per cent of the country’s total Gross Value Added (GVA). From FY18 to FY23, the sector grew at an average yearly rate of 10.6 per cent, increasing from Rs 2.37 trillion to Rs 3.9 trillion.

 

The sector is expected to continue growing, reaching Rs 6.5 trillion by FY30, with a yearly growth rate of 7.5 per cent. With rising demand for infrastructure and strong government support, India could become the third-largest construction market in the world, and the sector could contribute 15 per cent to the economy by 2030, according to analysts at BP Equities.