Garuda Construction GMP: Should investors prepare for losses on debut tomorrow?
Garuda Construction and Engineering is set to make its stock market debut on Tuesday. While the IPO received a decent subscription response of 7.5 times, the grey market premium (GMP) currently stands at 0, indicating a potential for a flat or even negative listing.
The company's financial performance was robust in FY23, but 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. A flat or negative listing is a possibility, and investors should be prepared for short-term losses,» said Shivani Nyati, Head of Wealth, Swastika Investmart.
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.
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