Garuda Construction and Engineering Ltd (GCEL) has launched its Initial Public Offering (IPO), allowing investors to participate in its growing business. The company, known for its comprehensive civil construction services, is offering shares from October 8 to October 10, 2024. This IPO is drawing interest from a variety of investors, including retail investors, non-institutional investors (NIIs), and qualified institutional buyers (QIBs).
The price range for Garuda Construction and Engineering’s IPO is set at ₹92 to ₹95 per share. Investors can apply for a minimum of 157 equity shares, with additional bids in multiples of 157 shares. The total size of the offer is ₹264.10 crore, which includes 1.83 crore new shares and an offer for sale (OFS) of 95 lakh shares from promoter PKH Ventures Ltd.
The company raised ₹75 crore from anchor investors ahead of the public issue. This step helped GCEL attract early interest from large institutional investors.
Subscription Status:
On Day 1, Garuda Construction and Engineering’s IPO has been subscribed 1.51 times. Bids for 3,00,76,333 shares were placed against the total 1,99,04,862 shares on offer, according to the BSE.
Breakdown of Subscription:
- Retail Investors: 2.77 times subscribed
- Non-Institutional Investors (NIIs): 74% subscription
- Qualified Institutional Buyers (QIBs): Yet to fully book
Retail investors have shown the most interest, with their portion oversubscribed. NIIs have also started showing interest, although the QIB portion is still open for more bids.
The funds raised from the fresh issue will be used by GCEL to meet its working capital requirements. Additionally, the company plans to use the funds for general corporate purposes, including possible acquisitions to support future growth.
The grey market premium (GMP) for Garuda Construction’s IPO is currently ₹5 per share. This suggests that investors are willing to pay slightly more than the issue price in the unofficial market, which is a sign of moderate investor confidence. At the upper end of the price band, the IPO could be listed at ₹100 per share, which is around 5.26% higher than the issue price of ₹95.
Although the current GMP indicates some investor interest, experts have noted that the premium has dropped in recent sessions. The highest GMP observed was ₹22, while the lowest was ₹0, indicating fluctuations in the grey market. This trend suggests cautious optimism, but it’s essential for investors to consider the company’s long-term potential beyond grey market signals.
Garuda Construction and Engineering Ltd has built a strong reputation in the infrastructure sector. The company focuses on affordable housing and commercial projects, which are seeing significant demand across India. With government initiatives focusing on infrastructure development, GCEL is positioned to benefit from these opportunities.
Investors considering the Garuda Construction IPO should assess their investment goals and risk appetite. While the company has a solid track record and a promising project pipeline, there are some risks. These include the company’s reliance on a few large projects, regulatory risks, and competitive pressures in the infrastructure sector.
However, with growing demand for affordable housing and government support for infrastructure projects, GCEL has opportunities to expand. The IPO is a chance for investors to be part of this growth, but they should consider both the strengths and weaknesses before making a decision.
Garuda Construction and Engineering Ltd’s IPO has received a strong response on the first day, especially from retail investors. With a price band of ₹92-95 per share and a moderate grey market premium, the company offers an opportunity for those looking to invest in the infrastructure sector. However, potential investors should do thorough research and consider expert advice before subscribing.
