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Garuda Construction IPO Listing on Tuesday: Even as the Garuda Construction IPO allotment was on October 11 evening, its shares are set to be listed on October 15 on the BSE and NSE. However, the grey market trend shows no listing gains tomorrow as the GMP or grey market premium on the unlisting shares of Garuda Construction remains zero.
The GMP of Garuda Construction turned zero on October 9 and has remained so since then. Before that, the unlisting shares had 5.26 per cent GMP in the grey market.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
The Garuda Construction IPO was available for public subscription between October 8 and October 10. The issue received a 7.55 times subscription garnering bids for 15,03,43,985 shares as against the 1,99,04,862 shares on offer.
Shivani Nyati, Head of Wealth, Swastika Investmart Ltd, said, “Garuda Construction and Engineering Limited, an infrastructure development company, is set to make its stock market debut. While the IPO received a decent subscription of 7.5 times, the grey market premium (GMP) currently stands at 0, indicating a potential for a flat or even negative listing.”
The company’s key strengths include a strong order book and project diversification, which provide a stable revenue stream. Additionally, Garuda Construction and Engineering’s return on net worth is superior compared to its peers, despite operating in a cyclical industry, she added.
“While the company’s financial performance was robust in FY23, the election year in FY24 led to a slowdown in revenue and profit growth. The IPO’s valuation was reasonable, but investors should carefully consider the cyclical nature of the industry and the potential impact of market volatility on the company’s performance. A flat or negative listing is a possibility, and investors should be prepared for short-term losses,” Nyati said.
The category for non-institutional investors received 9.03 times subscription, while the portion for retail individual investors (RIIs) got subscribed 10.81 times. The QIB category received a 1.24 times subscription.
The price band of the Rs 264.1-crore IPO has been fixed at Rs 92 to Rs 95 per share for the public issue.
The IPO allotment was finalised on October 11. Investors can check allotment status online on the websites of BSE and NSE, as well as on the registrar Link Intime India’s portal.
Garuda Construction IPO: How to Check Allotment Status?
Once the IPO allotment is finalised, the status can be checked by following these steps:
1) Go to the official BSE website via the URL —https://www.bseindia.com/investors/appli_check.aspx.
2) Under ‘Issue Type’, select ‘Equity’.
3) Under ‘Issue Name’, select ‘Garuda Construction Ltd’ in the dropbox.
4) Enter your application number, or the Permanent Account Number (PAN).
5) Then, click on the ‘I am not a robot’ to verify yourself and hit ‘Search’ option.
Your share application status will appear on your screen.
You can also visit direct Link Intime India Pvt Ltd’s portal — https://linkintime.co.in/initial_offer/public-issues.html and check the Garuda Construction IPO allotment status.
Garuda Construction and Engineering IPO: Analysts’ Recommendations
Most brokerages have given a ‘subscribe’ recommendation to the IPO.
Brokerage firm Anand Rathi in its IPO note said, “At the upper price band, the company is valuing at P/E of 24.28 times, with a market cap of Rs 884 crore post issue of equity shares and return on net worth of 36.14 times. We believe that the IPO is fully priced and recommend a ‘subscribe for long term’ rating to the IPO.”
It also said the company mainly focuses on civil construction of residential and commercial buildings with track record of successfully executing a diverse mix of construction projects, that is, with visible growth through increasing order book and strong project management and execution capabilities to finish projects on schedule with high construction quality.
Another brokerage Swastika Investmart, however, recommends this IPO to “high-risk investors” for the long term.
It said Garuda Construction and Engineering has a strong order book and project diversification are key strengths of the business. The PE ratio is in line with industry peers, but the return on net worth is superior. FY23 saw strong growth in revenue and profit, while FY24 was sluggish due to the election year.
Brokerage firm Stoxbox in its note said, “The company has reduced its debt & is debt-free. With an order book worth Rs 1,408 crores, which is 9.2 times its sales, and an IPO priced at a reasonable Price-to-Earnings (P/E) ratio of 19.5 times based on FY24 earnings, we recommend a ‘subscribe’ rating for this IPO from a long-term perspective.”
It added that Garuda Construction’s revenue doubled to Rs 154.2 crore in FY24, showing an impressive annual growth rate of 26 per cent. Its profit after tax also grew to Rs 36.4 crores in FY24, with an annual growth rate of 24.7 per cent. The average debt-to-equity ratio of other companies in the industry ranged between 0.23 times and 0.66 times during FY19-FY23.
Garuda Construction and Engineering IPO: More Details
The Garuda Construction and Engineering IPO is a mix of fresh issue of 1.83 crore equity shares and an offer of sale (OFS) of 95 lakh equity shares by promoter PKH Ventures.
The IPO size has been pegged at Rs 264 crore at the upper end of the price band.
Proceeds from its fresh issuance to the extent of Rs 100 crore will be utilised for working capital requirement; and balance towards general corporate purposes including unidentified inorganic acquisitions.
The Mumbai-based Garuda Construction is currently engaged in civil construction of six residential projects, two commercial projects, one industrial project and one infrastructure, with an order book of Rs 1,408.27 crore.
On financial front, the company’s revenue from operations rose from Rs 77.02 crore in FY22 to Rs 154.18 crore in FY24, at a Compound Annual Growth Rate (CAGR) of 26 per cent, and profit after tax increased from Rs 18.78 crore in FY22 to Rs 36.43 crore in FY24, at a CAGR of 25 per cent.
Corpwis Advisors is the sole book running lead manager and Link Intime India is the registrar of the issue.
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