3 mins read
05-October-2024
The Garuda Construction and Engineering Limited IPO has captured the attention of investors across India. As the company looks to make its public debut, it opens doors for individuals who wish to invest in one of the growing names in the infrastructure and construction industry. If you're a beginner investor or simply interested in understanding the specifics of this IPO, this article will help you decode everything you need to know in simple terms.
Key facts:
Garuda Construction and Engineering Limited IPO details
Garuda Construction and Engineering Limited plans to raise capital through a 100% Book Built Offer, comprising both a fresh issue of shares and an Offer for Sale (OFS). The fresh issue will see the company offer 1,83,00,000 equity shares, while its promoter, PKH Ventures Limited, offers 95,00,000 equity shares under the OFS. The total issue size thus stands at 2,78,00,000 equity shares. The IPO will be listed on both BSE and NSE, providing a broad platform for investors.- IPO open date: October 8, 2024
- IPO close date: October 10, 2024
- Issue type: Book Built Offer
- Listing: BSE, NSE
Offer structure
The offer structure for the Garuda Construction and Engineering IPO follows the usual guidelines laid out by SEBI. This ensures fairness and proportionality in allotments:- 50% is reserved for Qualified Institutional Buyers (QIBs), with up to 60% of the QIB portion reserved for anchor investors.
- 15% is allocated to Non-Institutional Investors (NIIs).
- 35% is dedicated to Retail Individual Investors (RIIs).
Why is Garuda Construction going public?
Garuda Construction and Engineering Limited is going public for several strategic reasons, aimed at boosting its financial health and market presence. The key motivations include:- Fund expansion plans: The IPO will provide the capital needed for upcoming construction projects across India.
- Reduce debt: Funds raised will help the company pare down its existing debt, improving its balance sheet.
- Increase brand visibility: Being listed on the stock exchanges will enhance the company’s brand presence.
- Provide liquidity to existing shareholders: The OFS component enables the promoter to partially divest, creating liquidity.
About Garuda Construction and Engineering Limited
Garuda Construction and Engineering Limited, founded in 2010, has become a leading player in the construction and infrastructure industry in India. Headquartered in Mumbai, it has completed numerous high-value projects, including commercial complexes, residential developments, and civil engineering works across the country.Key facts:
- Founded: 2010
- Headquarters: Mumbai, Maharashtra
- Promoter: PKH Ventures Limited
- Sector: Infrastructure and construction
Garuda Construction's financial performance
Here’s a snapshot of the financial performance of Garuda Construction and Engineering Limited based on the latest data from the RHP:| Financial Metric | FY 2024 | FY 2023 | FY 2022 |
| Revenue from operations (Domestic & Exports) | Rs. 15,417.83 lakh | Rs. 16,068.76 lakh | Rs. 7,702.08 lakh |
| Profit for the year | Rs. 3,643.53 lakh | Rs. 4,079.53 lakh | Rs. 1,878.22 lakh |
| EBITDA | Rs. 5,008.56 lakh | Rs. 5,599.17 lakh | Rs. 2,716.85 lakh |
| Net worth | Rs. 11,900.64 lakh | Rs. 8,261.18 lakh | Rs. 4,179.04 lakh |
| ROCE (%) | 46.87% | 71.27% | 40.69% |
| ROE (%) | 36.14% | 65.59% | 57.97% |
| Debt to equity ratio | 0.29 | - | - |
Key financial terms explained:
- Revenue from operations: This represents the total revenue generated from core business activities, both domestically and through exports.
- EBITDA: Earnings before interest, taxes, depreciation, and amortization – a measure of operating profitability.
- Net worth: Reflects the total assets of the company after deducting liabilities, indicating financial strength.
- ROCE (Return on Capital Employed): A measure of how effectively the company uses its capital to generate profits.
- Debt to equity ratio: This shows the balance between debt and equity financing in the company's capital structure.
Strength and risks of Garuda Construction
Like any investment, the Garuda Construction and Engineering Limited IPO offers both strengths and risks.Strengths of Garuda Construction
- Diverse project portfolio: The company has a strong order book and diversified projects across various sectors like residential, commercial, and civil infrastructure.
- Experienced management: Led by a seasoned leadership team, including founder Pravin Kumar Agarwal, with decades of industry experience.
- Solid financial performance: The company has consistently demonstrated growth in revenue and profitability, as reflected in its financial performance over the past few years.
- Growth potential: With a strong presence in key markets and expansion into new regions, the company is well-positioned for future growth.
Top risks to consider before applying for the Garuda IPO
- Dependence on government contracts: A significant portion of its revenue comes from government contracts, which can be influenced by changes in policy or government spending.
- Cyclicality of the construction sector: The construction industry is prone to economic cycles, which can impact the company’s project pipeline.
- Competitive industry: The company faces stiff competition from both domestic and international players, which could affect its market share.
What’s in it for investors?
For investors, the Garuda Construction and Engineering Limited IPO offers the following potential benefits:- Opportunity to invest in a growing sector: The infrastructure sector in India is on a growth trajectory, backed by government initiatives and rising urbanization.
- Solid growth prospects: Garuda's strong financials, growing order book, and leadership team make it a promising candidate for long-term growth.
- Potential for capital gains: Post-IPO, the company’s shares may appreciate in value, offering early investors a chance to earn significant returns.
