Garuda Construction IPO: GMP Today, Subscription Status, and Investor Insights
The initial public offering (IPO) of Garuda Construction and Engineering Ltd has garnered significant attention from investors, with the IPO being subscribed 3.25 times on its second day of bidding. This article provides an in-depth look at the current grey market premium (GMP), subscription status, and investor insights into this Mumbai-based engineering, procurement, and construction (EPC) company.
1. Garuda Construction and Engineering IPO Details
Garuda Construction and Engineering is aiming to raise up to Rs 264.1 crore through its IPO, which includes a fresh issue of Rs 173.85 crore and an offer-for-sale of Rs 90.25 crore by its promoter PKH Ventures. The IPO opened on October 8 and will close on October 10. The issue price is fixed at Rs 92 to Rs 95 per share, with a minimum bid lot of 157 shares.
Ahead of the IPO, Garuda Construction raised Rs 75 crore from seven anchor investors, with the maximum shares in the anchor book round being bagged by AG Dynamic Funds Ltd. The company has reserved 50% of the net offer for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and the remaining 35% for retail investors.
2. Subscription Status
As of the second day of bidding, the IPO has seen a robust response from investors. The total bids received were for 6,47,55,906 equity shares, which is 3.25 times the 1,99,04,862 equity shares offered for subscription. The subscription status is as follows: retail investors have subscribed 5.81 times, non-institutional investors have subscribed 1.95 times, and QIBs have yet to see any bids for their allocations.
The strong subscription indicates investor confidence in Garuda Construction and Engineering's business model, which includes providing end-to-end civil construction services for residential, commercial, residential cum commercial, infrastructure, and industrial projects.
3. Grey Market Premium (GMP)
The grey market premium for Garuda Construction and Engineering has seen a sharp correction following a muted response for the issue. Initially, the GMP was Rs 5, implying a 5.26% gain over the IPO price. However, as of the latest updates, the GMP has corrected to zero, indicating no listing gains expected from the IPO.
The zero GMP suggests that investors are not ready to pay a premium for the shares in the unofficial market. This could be due to market volatility or concerns about the company's financial performance and cash flow constraints.
4. Investor Insights
Brokerage firms have mixed views on the IPO. Anand Rathi recommends subscribing to the IPO for the long term, citing its diversification, strong order book, and better return ratios. However, Swastika Investmart advises high-risk investors to subscribe for the long term due to the company's strong order book and project diversification but also notes the potential risks stemming from cash flow constraints and past group-level financial issues.
Stoxbox also recommends subscribing to the IPO from a long-term perspective, highlighting the company's impressive revenue growth and profit margins. The firm notes that Garuda Construction has reduced its debt and has an order book worth Rs 1,408 crore, which is 9.2 times its sales.
Despite these positive points, caution is advised for investors due to the company's financial health and reliance on internal contracts. The promoter group's previous attempt to launch an IPO for PKH Ventures in 2023 had to be withdrawn, raising questions about the group's broader financial strategy.
The IPO's listing is expected on October 15, with shares to be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
In conclusion, while Garuda Construction and Engineering's IPO has seen a strong subscription, the GMP correction and mixed investor insights highlight the complexities involved in this public offering.
Investors should carefully weigh the potential growth against the risks before making a decision.