Garuda Construction and Engineering Limited IPO: GMP, subscription status to review. Buy or not?

Garuda Construction IPO: The initial public offering (IPO) of Garuda Construction and Engineering Limited hit the Indian primary market on 8th October 2024 and will remain open until 10th October 2024. This means investors have just one day to apply for the Garuda Construction and Engineering Limited IPO. As per the Garuda Construction and Engineering Limited IPO subscription status, the public issue has received a decent response from investors in all segments. Meanwhile, the grey market has been cautious about the Garuda Construction and Engineering Limited IPO. According to stock market observers, shares of the company are available at a premium of ₹5 in the grey market today.

Garuda Construction and Engineering Limited IPO GMP

As mentioned, Garuda Construction and Engineering Limited's IPO GMP (Grey Market Premium) today is ₹5, ₹5 lower than Wednesday's GMP of ₹10. Market observers said that Garuda Construction and Engineering Limited's IPO GMP has fallen from ₹20 to ₹5 in just two days, recording a 75% fall in its grey market premium.

Garuda Construction and Engineering Limited IPO subscription status

By 3:12 PM on day three of bidding, the public issue had been booked 6.96 times, the retail portion 10.13 times, the NII segment 7.94 times, and the QIB portion 1.14 times.

Garuda Construction and Engineering Limited IPO review

Giving a 'buy' tag to the Garuda Construction and Engineering Limited IPO, Anshul Jain, Head of Research at Lakshishree Investment and Securities, said, "Garuda Construction and Engineering is set to launch its IPO with a price band between ₹92 and ₹95 per equity share, with a face value of ₹5 each. The company, which has seen impressive growth, reported revenues of ₹7,702.08 lakh in FY22, soaring to ₹15,417.83 lakh by FY24. This reflects a solid Compound Annual Growth Rate (CAGR) of 26.03%."

"The funds from the IPO will support the company's operational needs and fuel general business expansion, including potential non-organic acquisitions. The latest Grey Market Premium (GMP) for the IPO stands at ₹5, pushing the estimated listing price to ₹100. This suggests the debut of the company shares. We maintain a "Subscribe" view on the Garuda Construction IPO for potential listing gains."

"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% to the economy by 2030. Financially, the company's revenue doubled from ₹77.0 crores in FY22 to ₹154.2 crores in FY24, showing an impressive annual growth rate of 26.0%. Its profit after tax also grew from ₹18.8 crores in FY22 to ₹36.4 crores in FY24, with an annual growth rate of 24.7%. The average debt-to-equity ratio of other companies in the industry ranged between 0.23x and 0.66x during FY19-FY23, but in FY23, the company has reduced its debt & is debt-free. With an order book worth ₹1,408 crores, which is 9.2 times its sales, and an IPO priced at a reasonable Price-to-Earnings (P/E) ratio of 19.5x based on FY24 earnings, we recommend a "SUBSCRIBE" rating for this IPO from a long-term perspective," said Akriti Mehrotra, Research Analyst at StoxBox.

However, SEBI registered research analyst VLA Ambala has suggested investors avoid this public issue, saying, "On the financial front, the company has witnessed strong growth. With revenues of more than ₹15 lakhs in FY24 and a profit margin of 34.80%, the IPO is priced with a P/E of 11.7x at the upper price band in FY24 earnings. The sudden spike is a red alarm, and its trade receivables are higher than its top lines, as reported so far. However, it has an order book of 1400 for next year, but in my opinion, its financial state is compelling. Also, IPO timing got bad when Indian markets showed weakness; therefore, its impact will be seen in IPO, especially when company fundamentals are not great. I see a mute listing in it, so if traders and investors plan only for listing gains, they can avoid this IPO. Many good companies in the market have outperformed and are currently available at discounted prices. If you have an investment plan, I would suggest to look for such companies. Moreover, do not get caught in FOMO as every yellow thing is not gold."

Garuda Construction and Engineering Limited IPO details

In the wake of the 'T+3' listing rule, the most likely Garuda Construction and Engineering Limited IPO allotment date is 11th October 2024, i.e., on Friday this week, whereas the most likely Garuda Construction and Engineering Limited IPO listing date is 15th October 2024, i.e., on Tuesday next week.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.