The three-day window for Garuda Construction and Engineering’s initial public offering (IPO) is set to close on Thursday, October 10, 2024. As of Wednesday, October 9, the IPO has received a solid response from investors, with an overall subscription of 2.69 times.
Retail Individual Investors (RIIs) have led the charge with a 4.80x subscription, while Non-Institutional Investors (NIIs) subscribed at 1.59x. However, the quota for Qualified Institutional Buyers (QIBs) remains low at 0.02x.
Let’s dive into the details of the IPO, subscription data, and Grey Market Premium (GMP) to help you decide whether this public issue is worth your investment.
Key Garuda Construction IPO Details
1. IPO Subscription Status as of Day 2
According to NSE data, the IPO has received bids for 5,34,87,702 shares against 1,99,04,862 shares offered, resulting in an oversubscription of 2.69 times. Here’s a breakdown of the subscription across categories:
| Investor Category | Subscription Rate |
|---|---|
| Retail Individual Investors (RIIs) | 4.80x |
| Non-Institutional Investors (NIIs) | 1.59x |
| Qualified Institutional Buyers (QIBs) | 0.02x |
2. IPO Price Band and Lot Size
- Price Band: ₹92-95 per share
- Face Value: ₹5 per share
- Lot Size: Minimum bid for 157 shares and in multiples of 157 shares thereafter
The public issue includes a fresh issue of 18.3 million shares and an offer for sale (OFS) of 9.5 million shares.
MUST READ: Garuda Construction and Engineering IPO: Key Details, GMP, Issue Date, and Listing Information
3. Grey Market Premium (GMP)
The Grey Market Premium (GMP) for Garuda Construction IPO has shown a slight uptick, currently trading at a premium of ₹5 over the upper price band of ₹95 per share. This translates to a 5.26% premium, indicating positive, albeit cautious, investor sentiment.
Should You Invest in Garuda Construction IPO?
1. Positive Factors to Consider
- Strong Retail Demand: The oversubscription from retail investors at 4.80x demonstrates strong demand in this category.
- Debt-Free Status: Garuda Construction’s debt-free financial position offers stability and reduces financial risk, which is a notable advantage in the capital-intensive construction sector.
- Robust Growth: With revenue doubling between FY2022 and FY2024, Garuda’s financial performance shows strong growth potential. The company’s order book of ₹1,408 crore also provides a solid future revenue pipeline.
2. Risks and Challenges
- Low QIB Participation: The lower subscription rate from Qualified Institutional Buyers (0.02x) might raise concerns for investors looking at long-term institutional interest.
- Market Competition: Garuda operates in a highly competitive market, with companies like PSP Projects Ltd and Capacite Infraprojects Ltd. Although Garuda is financially sound, its competitors have similar financial metrics.
Peer Comparison
Here’s how Garuda Construction compares with some of its industry peers:
| Company | P/E Ratio | Revenue (₹ Crore) | Net Profit (₹ Crore) | Debt-Free |
|---|---|---|---|---|
| Garuda Construction | 19.5x | 154.18 | 36.43 | Yes |
| PSP Projects Ltd | 20.0x | 398.42 | 58.12 | No |
| Capacite Infraprojects Ltd | 23.61x | 498.67 | 78.90 | No |
Conclusion: Should You Subscribe?
Garuda Construction’s IPO presents a balanced investment opportunity, especially for retail investors. The company’s debt-free status, robust order book, and strong financial growth make it an attractive choice for long-term investment. While the low QIB participation could be a red flag for institutional investors, the IPO’s GMP and retail demand show positive market sentiment.
If you are a retail investor looking for steady growth potential, subscribing to this IPO could be a wise decision, particularly considering its affordable price band and manageable lot size. However, for institutional investors, waiting for stronger QIB participation might be advisable before making a commitment.
Disclaimer
The information provided is for educational purposes only and does not constitute financial advice. Please consult a professional financial advisor before making investment decisions.