Garuda Construction shares list at 10% premium over IPO price; beats estimates

Shares of Garuda Construction and Engineering made a positive debut on the stock exchanges on Tuesday, with the stock price of the civil construction company listing at 10.5% premium over the issue price. Beating street estimates, Garuda Construction shares made a debut at ₹105 on the NSE against the initial public offering (IPO) price of ₹95. On the BSE, the stock kicked-off trading at ₹103.2 apiece, up 8.6% over the issue price.

Post listing, Shares of Garuda Construction rose as much as 27.3% to hit a high of ₹120.99 on the NSE, while the market capitalisation rose to ₹1,090 crore. The counter touched a high and low of ₹120.73 and ₹100.30, respectively, on the BSE.

The listing of Garuda Construction was better than market expectations as the stock was trading flat in the grey market, indicating listing to be around issue price.  

“Garuda Construction and Engineering Limited (GCEL) made a decent debut on the stock market, listing at ₹105 per share, a 10.5% premium over its issue price of ₹95. 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,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

“GCEL's strong order book, project diversification, and superior return on net worth contributed to the positive listing. While the company's growth slowed in FY24 due to the election year, the overall financial performance remains robust,” she says.

Nyati adds that investors who participated in the IPO are sitting on a modest gain, but it's important to maintain a cautious approach and continue monitoring the company's performance and market conditions. “Investors who are holding the position are suggested to keep a stop loss around the issue price.”

Garuda Construction and Engineering raised ₹264.10 crore via IPO, which was a combination of fresh issue worth ₹173.85 crore and offer for sale of stock worth ₹90.25 crore. The issue, having price band of ₹90-95, opened for bidding on October 8 and ended on October 10, 2024. 

The IPO was subscribed 7.55 times, led by 10.81 times bidding in the retail category; 9.03 times in the non-institutional investor segment; and 1.24 times by qualified institutional buyers (QIB).

Founded in 2010, Garuda Construction and Engineering is a growing civil construction company, providing end-to-end civil construction for residential, commercial, residential cum commercial, infrastructure and industrial projects. Besides, civil construction it is also involved in services. It provides services such as operations and maintenance services (O&M) and mechanical, electrical and plumbing (MEP) services and finishing works as a part of its construction services.

The company is currently engaged in civil construction of six residential projects, two commercial projects, one industrial project and one infrastructure, with an order book of ₹1,408.27 crore. On the financial front, its revenue from operations has grown from ₹77.02 crore in fiscal 2022 to ₹154.18 crore in fiscal 2024, at a Compound Annual Growth Rate (CAGR) of 26.03%. The profit after tax rose from ₹18.78 crore in fiscal 2022 to ₹36.43 crore in fiscal 2024, registering a CAGR of 24.72%.

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