The company’s financial performance was robust in FY23, however the election year in FY24 led to a slowdown in revenue and profit growth.
Analysts said the company’s key strengths include a strong order book and project diversification, which provide a stable revenue stream. Additionally, Garuda Construction and Engineering return on net worth is superior compared to its peers, despite operating in a cyclical industry.
“The IPO’s valuation was reasonable, but investors should carefully consider the cyclical nature of the industry and the potential impact of market volatility on the company’s performance,” said Shivani Nyati, Head of Wealth, Swastika Investmart.
Also Read: Hyundai Motor IPO: Premium pricing leaves little room for listing gains in India’s largest offering
The proceeds from the fresh issue to the extent of Rs 100 crore will be utilised for funding the working capital requirements and general corporate purposes including unidentified inorganic acquisition.
Garuda Construction provides end-to-end civil construction for residential, commercial, residential cum commercial, infrastructure and industrial projects and additional services for infrastructure and also hospitality projects.
The Indian construction sector has grown at a CAGR of 10.6% from FY18 to FY23 from Rs 2.37 lakh crore to Rs 3.9 lakh crore. The sector is further expected to grow to Rs 6.49 lakh crore by FY30 at a CAGR of 7.5%.
For the year ending March 2024, the company’s revenue from operations fell 4% year-on-year to Rs 151 crore and the profit after tax also declined to Rs 36.43 crore from Rs 40.79 crore a year ago.
Corpwis Advisors acted as the sole book-running lead manager for the IPO, and Link Intime India was the registrar of the offer.
Source link
