Garuda Construction IPO: Opens October 8 – Complete Details on Price Band and Lot Size
Garuda Construction IPO
Garuda Construction IPO: ₹264 Crore Mainboard Offering Opens October 8 – Comprehensive Guide on Price Band and Lot Size
The Garuda Construction and Engineering IPO is gearing up to open for subscription on October 8, 2024. This ₹264.10 crore public offering is a significant opportunity for investors looking to engage with a company poised for growth in the civil construction sector.
With the subscription window remaining open until October 10, 2024, potential investors should be ready to act quickly.
The company has set the price band for its shares between ₹92 and ₹95, which could attract a diverse range of investors from retail to institutional levels.
Understanding Garuda Construction and Engineering
Garuda Construction and Engineering is a subsidiary of PKH Ventures, which recently encountered challenges with its own ₹379 crore IPO in July 2023, leading to its withdrawal due to insufficient interest from institutional investors.
This backdrop adds an intriguing dimension to the upcoming Garuda IPO, as it seeks to establish its footing in the capital markets amidst fluctuating investor sentiment.
The IPO aims to raise funds through the issuance of 1.83 crore fresh equity shares, valued at approximately ₹173.85 crore.
Additionally, the company will offer 0.95 crore shares through an Offer for Sale (OFS), worth ₹90.25 crore.
This dual approach allows Garuda to bolster its capital structure while providing existing shareholders a chance to monetize their investments.
IPO Structure and Allocation
The Garuda Construction IPO has been structured thoughtfully to cater to various investor classes. The allocation of shares is as follows:
- 50% for Qualified Institutional Buyers (QIBs)
- 15% for Non-Institutional Investors
- 35% for Retail Investors
An interesting aspect of the QIB allocation is that up to 60% of this portion may be reserved for anchor investors, which is expected to provide a degree of stability to the offering.
The strategic positioning of shares for institutional and retail investors reflects the company’s intent to build a broad-based shareholder base.
Key Management and Advisors
Garuda Construction’s leadership comprises experienced professionals with a strong track record in the civil engineering domain.
The promoters include Praveenkumar Brijendra Kumar Agarwal, PKH Ventures Limited, and Makindian Township Private Limited.
The book-running lead manager for this IPO is Corpvis Advisors Private Limited, while Link Intime India Private Limited acts as the registrar to the issue. This experienced team aims to ensure a smooth IPO process and effective capital raising.
Important Dates and Lot Size
The IPO is set to open for anchor investors on October 7, a day before the general subscription begins. The allotment of shares is anticipated by October 11, with equity shares credited to successful investors’ demat accounts by October 14. The listing of shares on the BSE and NSE is scheduled for October 15, 2024.
Investors should note that the minimum lot size for participation in the IPO is 157 shares, translating to a minimum investment of approximately ₹14,915 for retail investors. The strategic pricing and lot size make it accessible for smaller investors, providing an opportunity to participate in the potential growth of Garuda Construction.
Utilization of IPO Proceeds
Garuda Construction has laid out a clear plan for the utilization of funds raised through the IPO. Approximately ₹100 crore will be allocated for working capital needs, which is crucial for sustaining ongoing projects and ensuring operational efficiency.
The remaining funds will be directed toward general corporate purposes and potentially for undisclosed inorganic acquisitions, positioning the company for future expansion and diversification.
Company Overview: Services and Market Position
Based in Mumbai, Garuda Construction & Engineering provides comprehensive civil construction services across a range of sectors, including residential, commercial, infrastructure, industrial, and hospitality projects.
The company has built a reputation for delivering high-quality construction solutions tailored to the specific needs of its clients.
In addition to core construction services, Garuda also offers operation and maintenance (O&M) services and mechanical, electrical, and plumbing (MEP) services.
This multi-faceted approach not only enhances the company’s service portfolio but also strengthens its market position as a one-stop solution for clients looking for integrated construction services.
Financial Performance and Challenges
The financial health of Garuda Construction has shown signs of volatility in recent years. In FY24, the company reported a net profit of ₹36.4 crore, reflecting a 10.7% decline from ₹40.8 crore in the previous year. This downturn can be attributed to weak topline performance and operational challenges.
Revenue from operations for the year ending March 2024 also saw a decline of 4%, dropping to ₹154.2 crore from ₹160.7 crore in FY23.
Additionally, EBITDA fell by 10.5% year-on-year to ₹49.8 crore, leading to a narrowing of margins by 230 basis points to 32.3%.
These financial metrics highlight the challenges the company faces in a competitive market, underscoring the need for effective capital allocation and strategic growth initiatives post-IPO.
Investment Considerations
Investors considering participation in the Garuda Construction IPO should weigh the potential risks and rewards carefully.
On one hand, the construction sector presents numerous growth opportunities, particularly with increasing infrastructure spending and urbanization trends in India.
On the other hand, the company’s recent financial performance may raise concerns about its operational efficiency and market competitiveness.
It’s essential for investors to conduct thorough due diligence and consult financial advisors before making investment decisions.
Evaluating the company’s growth strategy, market positioning, and financial health will be crucial in determining whether this IPO aligns with their investment objectives.
Final Remarks
The Garuda Construction IPO represents a compelling investment opportunity for those looking to engage in the burgeoning construction sector.
With a well-structured offering, a clear plan for fund utilization, and a diverse service portfolio, the company is positioning itself for growth.
However, potential investors should remain vigilant and informed, considering both the opportunities and challenges that lie ahead.
Engaging with this IPO could be a strategic move, particularly for investors looking to capitalize on the long-term growth trajectory of India’s infrastructure and construction landscape.
