Garuda Construction and Engineering listing: Book profit or hold?

Garuda Construction and Engineering listing: Despite a sluggish outlook in the grey market, which had indicated a flat or negative listing, the company surprised many with its strong opening.

In Short

• Stock debuts at 10.5% premium, beating grey market expectations
• Analysts caution on market volatility despite positive stock performance
• Investors advised to book profits or hold, depending on risk tolerance

Garuda Construction and Engineering Limited (GCEL) made a decent debut on the stock market, listing at Rs 105 per share, a 10.5% premium over its issue price of Rs 95. Despite a sluggish outlook in the grey market, which had indicated a flat or negative listing, the company surprised many with its strong opening.

Now, the question arises: should investors book profits or hold on?

GCEL’s Rs 264-crore IPO saw robust demand, especially from retail and non-institutional investors, who oversubscribed their portions by 10.81 and 9.03 times, respectively. While the qualified institutional buyers’ quota was subscribed 1.24 times, retail investors drove much of the excitement surrounding the stock.

Ahead of its IPO, GCEL raised Rs 75 crore through its anchor book, and the public issue included fresh equity worth Rs 173.85 crore, along with an offer-for-sale of 95 lakh shares by promoter PKH Ventures. The company, which offers a wide range of construction services across residential, commercial, industrial, and infrastructure sectors, plans to use the proceeds for working capital, corporate expenses, and possible acquisitions.

Analysts are cautiously optimistic about the stock’s performance. The company's diversified project portfolio, strong order book, and solid return on net worth are seen as key factors driving the positive market response. However, they have warned that GCEL’s growth momentum slowed in FY24 due to the election year, and market volatility could impact the stock.

Shivani Nyati, Head of Wealth at Swastika Investmart Ltd, advises investors to tread carefully. While the listing gains are encouraging, she suggests keeping a stop loss around the issue price to protect against potential downside risks.

“Investors should closely monitor the company's performance and market conditions. Those holding shares should consider booking profits but also remain cautious about long-term volatility,” Nyati said.

While GCEL’s listing has provided a decent opportunity for short-term gains, investors need to weigh their options carefully. Those looking for stability might want to lock in profits now, while others with a higher risk tolerance could consider waiting for further growth, albeit with a close eye on the market.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)