Garuda Construction shares list at 10% premium defying IPO GMP trend

Garuda Construction IPO listing today: Garuda Construction and Engineering's shares made a positive debut on the stock exchanges on Tuesday. The company's shares listed at Rs 103.20 on the BSE, reflecting a premium of 8.63 per cent over the IPO issue price of Rs 95. On the NSE, the shares debuted at a premium of 10.52 per cent at Rs 105.
 

Ahead of the listing, the grey market premium for Garuda Construction’s IPO turned flat, signaling a subdued debut for the company’s shares, according to sources tracking grey market activity.

Shivani Nyati, Head of Wealth at Swastika Investmart, said, "This positive performance is a pleasant surprise, given the pre-listing expectations of a flat or even negative listing, fueled by the modest grey market premium and the cyclical nature of the infrastructure industry."

Nyati believes that GCEL's strong order book, project diversification, and superior return on net worth contributed to the positive listing. Although the company's growth slowed in FY24 due to the election year, its overall financial performance remains robust.

"Investors who participated in the IPO are likely sitting on a modest gain, but it's essential to maintain a cautious approach and continue monitoring the company's performance and market conditions," Nyati said, suggesting that investors holding the position should keep a stop loss around the issue price.

Available at a price band of Rs 92-95 with a lot size of 157 shares, Garuda Construction’s IPO consisted of a fresh issue of 18,300,000 shares and an offer for sale of 9,500,000 shares, each with a face value of Rs 5. The IPO, which opened for subscription on Tuesday, October 8, 2024, received a decent response, with a subscription rate of 7.55 times by the closing date on October 10, 2024.

Retail Individual Investors (RIIs) led the subscription with 10.81 times, followed by Non-Institutional Investors (NIIs) at 9.03 times, and Qualified Institutional Buyers (QIBs) at 1.24 times. The basis of allotment of Garuda Construction IPO shares was finalised on Friday, October 11, 2024.

Link Intime India is the registrar for the IPO, and Corpwis Advisors is the sole book-running lead manager.

Several brokerages, including Anand Rathi Research and Arihant Capital Markets, have reviewed Garuda Construction. The company raised Rs 75 crore from anchor investors, with the bidding concluding on Monday, October 7, 2024.

Garuda Construction plans to utilise Rs 100 crore from the IPO proceeds to fund its long-term working capital requirements. The remaining amount will be allocated towards general corporate expenses and potential inorganic acquisitions.

Garuda Construction and Engineering is a major Indian infrastructure development company, providing construction, engineering, and procurement services across sectors like transportation, energy, and industrial projects. It is known for delivering innovative solutions and high-quality projects. The company reported a consolidated net profit of Rs 36.44 crore and sales of Rs 154.18 crore for the twelve months ended on 31 March 2024.