Unlock Investment Potential: Explore the Upcoming ₹264 Crore IPO in the Construction and Engineering Sector
Garuda Construction and Engineering Ltd will launch its Initial Public Offering from 8 October 2024 to 10 October 2024. The company’s IPO comes along with both fresh equity shares and an offer for sale. Here is all you need to know about this IPO.
More About the IPO
The Offer received from the IPO of Garuda Construction and Engineering Ltd is to raise about ₹264.10 crores. It represents a fresh issue of 1.83 crore equity shares of the face value of ₹5 aggregating ₹173.85 crores and the offer for sale (OFS) of 0.95 crore shares of the face value of ₹5 amounts to ₹90.25 crores. The price band has been fixed in the range of ₹92- ₹95, per equity share with the face value of ₹5 each.
Key Dates and Listing
The IPO opens for subscription on October 8, 2024. The issue closes on October 10, 2024. Allotments are expected to be completed by October 11, 2024. Refunds will start being processed from October 14, 2024. Credits in demat accounts are also expected on the same day. The listing date is scheduled for October 15, 2024, on both BSE and NSE.
Investment Information
The bids can be made in 157 shares and multiples of the same. The minimum investment by the retail investor is ₹14,915. Whereas for the non-institutional investors, the minimum lot size is 14 lots, working out to 2,198 shares, with a minimum investment of ₹208,810, and in the large NIIs category, 68 lots amounting to 10,676 shares with a minimum investment ₹1,014,220.
Objective of the IPO
The net proceeds from the fresh issue are intended to be utilized for the following purposes inter alia:
- Financing working capital requirements
- Repayment of certain borrowings
- General corporate purposes
The Offer for Sale allows exiting shareholders to partially exit and realize a portion of their investments.
Company History
Garuda Construction and Engineering Ltd is also well established in the construction and engineering sector. The company majorly specializes in managing large infrastructure projects. The company has diversified portfolios which include residential, commercial as well as industrial projects. Over the last several years of its existence, the company has built up the goodwill of quality and timely delivery to clients and is a name in its industry.
Financial Performance
The company has exhibited excellent financial performance during the last few years. Garuda Construction earned a revenue of ₹1,200 crores for the fiscal year ending March 31, 2024, with the company’s net profit being ₹150 crores. The EPS for the same period stood at ₹4.87. At ₹95, the upper price band, P/E ratios would be about 19.50x, competitive with the industry P/E of 27.58x.
Risks and Issues
As attractive as the IPO opportunity is, investors ought to consider the following risks:
- Market Volatility: The stock market can be volatile and share prices are expected to fluctuate post-listing.
- Sector-specific risks: Construction and engineering sectors usually expose risks associated with regulatory changes, project delays, and cost overruns among others.
- Financial Performance: There will be economic factors, competition, and operational difficulties affecting the future financial performance.
Subscription Details
This IPO has been structured to accommodate several categories of investors. Under Subscription, shares are allotted based on the following split:
- Qualified Institutional Buyers (QIBs): Not more than 50% of the net issue
- Non-Institutional Investors (NIIs): Not less than 15% of the net issue
- Retail Individual Investors (RIIs): Not below 35% of the net offer
Conclusion
By the nature of the prominent market position and financial performance shown in the records of the company, this IPO by Garuda Construction and Engineering Ltd is promising an investment opportunity.
This aspect is supported by a clear strategy in terms of using the funds raised and a competitive price band, thereby presenting a high-demand IPO amongst investors. However, any risks accompanying it and proper research before even getting into the investment decision become of utmost importance.
