Garuda Construction and Engineering IPO

Garuda Construction and Engineering Limited, established on September 21, 2010, is a civil construction firm based in Mumbai that specializes in a wide range of services including residential, commercial, industrial, infrastructure, and hospitality projects. The company offers comprehensive construction services, covering everything from building structures to mechanical, electrical, and plumbing services, including operations and maintenance.

Initially focused on projects for its parent group, Garuda is now expanding its operations by directly engaging in third-party contracts. This strategic shift allows the company to leverage its extensive experience and take on larger developmental roles. Notable projects include the Golden Chariot Vasai Hotel & Spa and the construction of the Delhi Police Headquarters.

Currently, Garuda has an order book comprising twelve ongoing projects, seven of which exceed a contract value of ₹10 crore each. The company aims to enhance its execution capabilities and broaden its client base beyond its original affiliations. Financially, Garuda reported a revenue increase of 108.63% for fiscal 2022-23, reaching ₹160.69 crore, with a profit after tax rise of 117.20% to ₹40.79 crore. As of November 30, 2023, the revenue stood at ₹80.42 crore with a PAT of ₹18.73 crore.

Garuda Construction and Engineering IPO Strengths

• Garuda maintains high construction quality and timely delivery through effective project management and modern equipment from third-party vendors.
• In FY2023, Garuda achieved revenues of ₹16,068.76 lakhs, with an EBITDA margin of 34.85% and a ROCE of 71.27%.
• The company’s order book is valued at ₹1,40,827.44 lakhs, indicating strong future revenue potential.
• By utilizing third-party vendors for equipment, Garuda keeps its asset base light, enhancing cost efficiency and operational stability.

Garuda Construction and Engineering IPO Risks

• Garuda Construction reported negative cash flows from operations of (-₹192.64 lakhs) as of November 30, 2023, potentially threatening financial stability.
• With 64.61% of ongoing projects involving unrelated entities, the company faces risks of non-performance and project delays.
• The absence of non-compete agreements allows related group entities to compete directly with Garuda, risking future business opportunities.
• Ongoing transactions with related parties may not be at arm’s length, raising concerns about financial discrepancies.
• Historical non-compliance in securities allotment could result in penalties, affecting Garuda’s reputation and financial health.