Company Background
Garuda Construction and Engineering Limited is a prominent civil construction company in India, offering a range of services across various sectors. The company is known for providing end-to-end construction solutions in residential, commercial, industrial, infrastructure, and hospitality projects. Established with a strong foundation in civil engineering, Garuda Construction handles projects from design and planning to execution and final delivery. Its expertise spans across detailed route surveys, soil and water testing, obtaining necessary permissions, and procuring materials, which contribute to its reputation as a reliable construction partner.
With a robust portfolio, the company is currently managing multiple ongoing projects, including six residential, two commercial, and one infrastructure project. Their work extends beyond civil construction into operation and maintenance (O&M), mechanical, electrical, and plumbing (MEP) services, making them versatile in delivering comprehensive construction services.
Below is a table outlining key information about Garuda Construction and Engineering Limited:
| Details | Description |
|---|---|
| Company Name | Garuda Construction and Engineering Limited |
| Industry | Civil Construction |
| Headquarters | India |
| Major Projects | Residential, Commercial, Industrial, Infrastructure, Hospitality |
| Current Projects | 6 Residential, 2 Commercial, 1 Industrial, 1 Infrastructure |
| Order Book (2024) | ₹1,408 crore |
| Upcoming IPO | October 8-10, 2024 |
| IPO Price Range | ₹92 to ₹95 per share |
| Promoters | Pravinkumar Brijendra Kumar Agarwal, PKH Ventures Limited, Makindian Township Private Limited |
| Revenue (FY23) | ₹161.02 crore |
| Net Profit (FY23) | ₹40.8 crore |
| Listed Competitors | PSP Projects Ltd, Capacit’e Infraprojects Ltd, Vascon Engineers Ltd |
| Financial Concerns | High trade receivables, revenue inconsistency |
| Focus Areas | Working capital requirements, acquisitions, corporate growth |
Financial Performance
Despite its strong market presence, Garuda Construction has faced financial volatility over recent years. The company saw significant revenue growth in the fiscal year 2023, where it posted revenues of ₹161.02 crore and net profit of ₹40.8 crore. However, the company experienced a revenue decline in 2024, with a revenue of ₹154.47 crore and a net profit of ₹36.44 crore. This trend continued in 2025, as reported in April, where the company posted only ₹11.88 crore in revenue. This inconsistency raises concerns about the sustainability of the company’s growth momentum.
Garuda Construction’s order book, however, continues to expand, with ongoing projects valued at ₹1,408 crore as of October 2024. While this indicates potential for future growth, the company’s rising trade receivables, which have exceeded its revenue figures, present a financial challenge. As of April 2024, trade receivables reached ₹182.56 crore, further increasing from ₹176.24 crore in March 2024.
Upcoming IPO and Objectives
Garuda Construction is set to launch its Initial Public Offering (IPO) from October 8 to October 10, 2024. The company plans to raise ₹264.10 crore through this offering, with a price band set between ₹92 and ₹95 per share. This IPO includes both a fresh issue and an offer for sale. The fresh issue, amounting to ₹173.85 crore, will be used primarily to meet working capital requirements and for general corporate purposes, including potential unidentified inorganic acquisitions. The offer for sale is set to raise ₹90.25 crore, from which the company will not derive any proceeds.
The company’s promoters, which include Pravinkumar Brijendra Kumar Agarwal, PKH Ventures Limited, and Makindian Township Private Limited, hold a 96.81% pre-issue shareholding in the company. Post-IPO, the company will list its shares on the BSE and NSE, offering retail investors an opportunity to participate in its growth.
Order Book and Project Pipeline
Garuda Construction’s project pipeline remains strong, with ongoing and upcoming projects spread across various Indian states including Maharashtra, Arunachal Pradesh, Karnataka, Rajasthan, and Punjab. The company’s total order value as of September 2024 stands at ₹1,40,827.44 crore. These projects, encompassing infrastructure, industrial, and residential developments, reflect the company’s extensive expertise in civil construction. The company’s focus on diverse sectors, including infrastructure and industrial projects, strengthens its ability to secure large-scale contracts from both government and private clients.
Growth Challenges and Opportunities
While Garuda Construction’s order book provides a promising outlook, the company faces several challenges. One major concern is the growing disparity between its trade receivables and revenue. As of March 2024, the company’s trade receivables stood at ₹176.24 crore, exceeding its reported revenue of ₹154.47 crore for the same period. By April 2024, this figure had risen to ₹182.56 crore, raising concerns about the company’s cash flow and ability to collect payments from clients in a timely manner.
Another challenge is the inconsistency in its financial performance. Despite strong revenue growth in fiscal year 2023, the company reported a decline in both revenue and profit in the subsequent year. This unpredictability in earnings could affect investor confidence, especially as the company prepares for its IPO. The company must address these financial issues to maintain investor trust and sustain its growth trajectory.
On the opportunity side, Garuda Construction’s growing order book and presence in multiple states provide a strong foundation for future expansion. The company’s involvement in large infrastructure and industrial projects offers significant growth potential, particularly as India continues to invest in infrastructure development. Furthermore, the company’s plans for inorganic acquisitions could provide new growth avenues, helping it expand its market presence and diversify its revenue streams.
Competitive Landscape
Garuda Construction operates in a highly competitive industry, where it faces competition from several established players such as PSP Projects Ltd, Capacit’e Infraprojects Ltd, and Vascon Engineers Ltd. In comparison to its peers, Garuda Construction’s price-to-book value (P/BV) ratio stands at 5.97, which is higher than the industry average. This indicates that the company’s stock may be priced at a premium relative to its book value, reflecting investor expectations for higher future earnings.
However, when compared to its peers in terms of return on equity (RoE), Garuda Construction outperforms several competitors with a RoE of 31%. This suggests that the company has been able to generate significant returns for its shareholders, despite its financial challenges. Nevertheless, the company must improve its financial stability to maintain its competitive edge in the market.
Risk Factors
Investors considering Garuda Construction’s IPO should be aware of several risk factors. First, the company’s reliance on large-scale infrastructure projects exposes it to risks related to project delays, cost overruns, and government policies. Any disruptions in the execution of these projects could adversely affect the company’s financial performance.
Second, the company’s high trade receivables and declining revenue raise concerns about its ability to maintain a healthy cash flow. If the company is unable to collect payments from clients on time, it may face liquidity issues, which could affect its ability to fund ongoing projects and meet its working capital requirements.
Finally, the construction industry is highly cyclical and depends on macroeconomic factors such as interest rates, government spending, and economic growth. Any downturn in the economy could negatively impact the company’s order book and financial performance.
In summary
Garuda Construction and Engineering Limited stands at a crucial juncture as it prepares to go public with its upcoming IPO. While the company has a strong order book and a promising project pipeline, its financial challenges cannot be overlooked. Investors should weigh the potential risks and rewards before considering an investment in the company’s IPO. For Garuda Construction, improving its cash flow management and addressing its financial inconsistencies will be key to sustaining long-term growth and maintaining investor confidence.
By focusing on delivering high-quality projects and exploring new growth opportunities through acquisitions, the company has the potential to strengthen its position in India’s construction and infrastructure sectors.
