Garuda Construction and Engineering IPO: 10 key things to know from RHP before subscription opens on October 8

The public offering for Garuda Construction and Engineering Ltd is scheduled to start on October 8 and close on October 10. The company has established a share price band of ₹92-95 for its ₹264-crore issue. The IPO consists of 1.83 crore new equity shares and an Offer For Sale (OFS) of 95 lakh equity shares by promoter PKH Ventures.

The IPO size is set at ₹264 crore, with the upper end of the price band determining this.

Of the fresh issuance, ₹100 crore will be utilised for working capital requirements, and the remainder will be used for general corporate purposes, including potential inorganic acquisitions.

Half of the issue size has been allocated to qualified institutional buyers, while 35 per cent is set aside for retail investors, and the remaining 15 per cent is reserved for non-institutional investors. Interested investors can bid for a minimum of 157 equity shares and in multiples of 157 equity shares thereafter.

Here are 10 key things from the Red Herring Prospectus (RHP) that investors might want to know before subscribing to the issue.

Garuda Construction IPO Promoters

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

Garuda Construction IPO Peers

The company's listed peers are PSP Projects Ltd (with a P/E of 20.0), Capacite Infraprojects Ltd (with a P/E of 23.61), Vascon Engineers Ltd (with a P/E of 22.66), Ahluwalia Contracts (India) Ltd (with a P/E of 22.97), and B L Kashyap & Son Ltd (with a P/E of 48.6).

Garuda Construction and Engineering Business

Established in 2010, Garuda Construction and Engineering is a construction firm providing a diverse array of construction services catering to residential, commercial, residential/commercial, infrastructure, and industrial projects. Additionally, the company offers supplementary services for infrastructure and hospitality projects. Garuda Construction and Engineering also specialises in providing operation and maintenance (O&M) and mechanical, electrical and plumbing (MEP) services, as well as finishing works as part of its construction services.

Garuda Construction and Engineering Industry

India's manufacturing, mining, and construction industries are growing at a rapid pace, propelling the country's industrial sector. Favourable government policies including production-linked incentive programs and initiatives to promote infrastructure development, together with a decline in commodity prices, are all contributing factors to this expansion. All these elements work together to keep industrial growth buoyant, and as a result, y-o-y industrial growth is predicted to be 7.9%, valued at ₹48.9 trillion in FY24.

Garuda Construction and Engineering Order Book

On September 28, when the RHP was filed, the company's total order book for ongoing and upcoming projects was ₹1,40,827.44 lakhs. There are currently 12 ongoing projects in the order book, and out of those, 7 projects have a contract value exceeding 10,000 lakhs each.

Garuda Construction and Engineering Group Companies

The total number of group companies in the organisation is 24. Please see the list provided below.

Garuda Construction and Engineering Financials

The revenue of Garuda Construction and Engineering Limited experienced a 4% decrease, while the profit after tax (PAT) saw an 11% drop from the financial year ending with March 31, 2024 to March 31, 2023.

Information about Major Customers

Revenue from the Construction segment totalled ₹1,187.50 lakhs from four customers (as of March 31st, 2024: two customers contributed ₹9,245.65 lakhs, and as of March 31st, 2023: three customers contributed ₹14322.82 lakhs, and as of March 31st, 2022: two customers contributed ₹6492.16 lakhs). No other customer accounted for more than 10% of the revenues.

Garuda Construction IPO - Key Risks

Some of the key risks are as follows;

• Pravin Kumar Brijendra Kumar Agarwal, a promoter of the company, is currently facing a criminal case initiated by the Airport Police Station, which is awaiting resolution by the Hon’ble Metropolitan Magistrate at Andheri, Mumbai. Any legal proceedings or negative consequences from these proceedings could impact the promoter's reputation and consequently the company's business.
• The promoter group PKH Venture Limited had previously filed an IPO that was not subscribed to, which led to the withdrawal of the IPO.

Lock-in of equity shares allotted to anchor investors

The anchor investors portion will have 50% of the equity shares allotted to anchor investors locked in for 90 days from the date of Allotment, while the remaining 50% of the equity shares will be locked in for 30 days from the date of allotment.

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