Garuda Construction and Engineering IPO Listing: Stock lists at 12% premium over IPO price
Garuda Construction and Engineering IPO Listing
Garuda Construction and Engineering IPO Listing: A Promising Market Debut
Garuda Construction and Engineering, a prominent entity in the construction sector, recently launched its Initial Public Offering (IPO) valued at ₹264.10 crore.
The IPO was open for subscription from October 8 to October 10, 2024, attracting significant attention from investors.
With today marking its official listing on the stock exchanges, Garuda’s market performance has garnered considerable interest and optimism.
Market Performance
The shares of Garuda Construction and Engineering made a robust entry into the domestic market. Priced at ₹95, the stock opened at ₹103.20 on the Bombay Stock Exchange (BSE) and ₹105.00 on the National Stock Exchange (NSE).
This strong debut yielded an immediate listing gain of approximately 10.53% for investors. The stock didn’t stop there; it surged further, reaching a peak of ₹120.73 on the BSE.
By the end of the first trading day, the shares closed at ₹106.83, offering IPO investors an impressive profit of 12.45%.
This performance illustrates strong investor sentiment and confidence in the company’s future growth.
Investor Interest and Subscription Details
Garuda’s IPO received an overwhelming response from the investment community, resulting in a subscription rate exceeding seven times the total shares available.
This robust demand highlights the attractiveness of Garuda’s offerings and its growth prospects. The retail investor segment saw a remarkable subscription rate of 10.81 times, while Non-Institutional Investors (NII) participated heavily with a subscription rate of 9.03 times. Qualified Institutional Buyers (QIB) also contributed to the strong demand, with a subscription of 1.24 times.
The IPO was structured with shares offered in lots of 157, within a price band of ₹90 to ₹95. The strong interest across various investor categories reflects confidence in Garuda’s business model and market position.
Allocation of IPO Proceeds
The IPO proceeds consist of new shares valued at ₹173.85 crore, alongside 95 lakh shares sold through the Offer for Sale (OFS) route.
The funds raised through the new shares will be instrumental in addressing several corporate objectives.
Specifically, Garuda plans to allocate the capital towards enhancing its working capital requirements, pursuing inorganic acquisitions, and covering general corporate purposes.
This strategic allocation of funds is expected to bolster the company’s operational capabilities and facilitate further expansion.
The money obtained from the OFS will directly benefit the selling shareholders, providing them with liquidity and enabling them to realize gains from their investment.
Company Profile and Operations
Garuda Construction and Engineering was established in 2010 and has since emerged as a leading provider of comprehensive construction services.
The company specializes in various sectors, including residential, commercial, and industrial projects.
Additionally, Garuda offers Operation and Maintenance (O&M) services, Mechanical, Electrical, and Plumbing (MEP) solutions, as well as finishing services, making it a versatile player in the industry.
With operations spanning several states, including Maharashtra, Karnataka, Tamil Nadu, Rajasthan, Punjab, and Arunachal Pradesh, Garuda has built a robust presence across the country.
As of September 2024, the company boasts an impressive order book valued at ₹1,40,827.44 lakh, encompassing a diverse portfolio of ongoing and pending projects.
This substantial order book not only underscores the company’s operational scale but also reflects its capability to secure and execute significant contracts.
Financial Health and Performance
An in-depth analysis of Garuda’s financial health reveals a trajectory of growth with some fluctuations. The company reported a net profit of ₹18.78 crore in the financial year 2022, which significantly increased to ₹40.8 crore in FY 2023.
However, in FY 2024, the profit experienced a decline to ₹36.44 crore, raising questions about the company’s consistency in profitability.
During this same period, Garuda’s revenue displayed remarkable growth, achieving a compound annual growth rate (CAGR) of over 41%, culminating in total revenue of ₹154.47 crore.
This impressive revenue growth indicates the company’s successful execution of projects and its ability to capitalize on market opportunities.
In the current financial year (2024-25), the company has reported a net profit of ₹3.5 crore with revenue amounting to ₹11.88 crore as of April 2024.
While this reflects a solid start to the fiscal year, stakeholders will be closely monitoring how the company navigates the coming quarters to sustain growth and profitability.
Market Environment and Future Outlook
The construction sector is experiencing a transformative phase, driven by increased government infrastructure spending, urbanization, and a growing demand for residential and commercial spaces.
Garuda, with its extensive experience and diversified service offerings, is well-positioned to capitalize on these trends.
The company’s strategic initiatives to enhance its service portfolio and expand its geographic footprint further bolster its growth prospects.
Investors are likely to keep a close eye on Garuda’s performance in the upcoming quarters, particularly in relation to its ability to maintain profitability and effectively utilize the funds raised through the IPO.
The company’s ongoing projects and future pipeline will be critical determinants of its success.
Final Remarks
The successful listing of Garuda Construction and Engineering’s IPO is a testament to the strong investor confidence in the company’s growth potential and strategic direction.
With a robust order book, an impressive range of services, and a commitment to operational excellence, Garuda is poised for further expansion in the competitive construction market.
As it embarks on this new chapter as a publicly traded entity, stakeholders will be eager to see how Garuda navigates the challenges and opportunities that lie ahead.
The future looks promising, but the company must deliver consistent results to sustain investor interest and support long-term growth.
