The subscription for Gala Precision Engineering's initial public offering (IPO) openstoday, Monday, September 2, and ends on Wednesday, September 4. The price range for the initial public offering (IPO) of Gala Precision Engineering Limited is set at ₹503 to ₹529 per equity share, with a face value of ₹10. Anchor investors have contributed ₹50.29 crores to Gala Precision Engineering, a precision component maker of specialised springs such as disc and strip springs (DSS), coil and spiral springs (CSS), and special fastening solution (SFS). The lot size for the Gala Precision Engineering IPO is 28 equity shares, and further shares can be bought in multiples of 28.
Gala Precision Engineering IPO has reserved not more than 50% of the shares in the public issue for qualified institutional buyers (QIB), not less than 15% for non-institutional Institutional Investors (NII), and not less than 35% of the offer is reserved for retail investors.
The company provides its products to original equipment manufacturers (OEMs), Tier 1 and channel partners. These products are used in industries such as general engineering, off-highway equipment, electrical, and transportation, as well as mobility segments like automotive and railways. Renewable energy includes wind turbines and hydropower plants.
The company has a diverse clientele of over 175 active global customers, which includes renewable energy customers such as Vestas Wind Technology India Pvt Ltd, Enrecon GmbH, GE India Industrial Pvt Ltd, Altra Industrial Motion India Pvt Ltd, among others. It also serves industrial customers like L&T Electrical & Automation Products (a unit of Schneider Electric Pvt. Ltd.), Schneider Electric India Pvt. Ltd., Wuerth Industrial Services India Pvt. Ltd., Bufab India Pvt. Ltd., as well as automotive customers such as Schaeffler India Ltd., Brembo Brake India Pvt. Ltd., Hitachi Astemo Chennai Pvt. Ltd., Exedy Clutch India Pvt. Ltd., Endurance Technologies Ltd. The company also caters to the Railways industry, providing services to Faiveley Transport Rail Technologies India Pvt. Ltd. (a Wabtec company).
In the fiscal year 2023–2024, the company's operating revenue was ₹202.54 crore, while its profit after taxes was ₹22.33 crore.
The initial public offer of Gala Precision Engineering IPO has been subscribed 10.84 times on the first day of subscription today, as per BSE data.
The initial share sale received bids for 2,41,14,972 shares against 22,23,830 shares on offer, according to BSE data.
The portion for retail investors received 12.17 times subscription while the quota for non-institutional investors got subscribed 20.72 times. The qualified institutional buyers (QIBs) part is booked 86%, and the employee portion has been subscribed 38.33 times.
As per the brokerage, the firm is involved in producing specialised precision components that are essential to the applications of the end customers. The brokerage expects a sustained increase in demand from end-user industries such as renewable energy, industrials, and railroads for its goods. Therefore, they rate the issue as "SUBSCRIBE" given its dominant market position, global Tier-1 clientele, and high requested valuation.
“At higher price band, the company is demanding a EV/Sales multiple of 2.9x, which is at discount to peer average of 4.7x. Thus the issue is attractively priced,” the brokerage stated.
According to the brokerage's assessment, the company has demonstrated robust and steady revenue growth. While profitability has experienced minor fluctuations, the overall financial performance is still positive. The IPO's valuation aligns with industry norms.
From an investor standpoint, the brokerage report indicates that given current market trends and increasing demand for precision components, the company is strategically positioned for a successful initial public offering and ongoing growth.
A fresh issue of 2.56 million shares and an offer for sale (OFS) of 616,000 shares by existing promoters and shareholders are both part of the initial public offering (IPO). The overall issue size at the upper price band is ₹167.93 crore, with the fresh issue priced at ₹134.34 crore and the OFS at ₹32.58 crore.
The company intends to use the net proceeds to finance the following goals: establishing a new facility in Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu to manufacture hex bolts and high tensile fasteners; financing the capital expenditure needed to buy machinery, plant, and equipment in Wada, Palghar, Maharashtra; repaying or prepaying some of the company's borrowed funds, in full or in part; and general corporate purposes.
The registrar for the Gala Precision Engineering IPO is Link Intime India Private Ltd, and the book running lead manager is Pl Capital Markets Private Limited.
Gala Precision Engineering IPO grey market price is + ₹240. This indicates Gala Precision Engineering share price was trading at a premium of ₹240 in the grey market, according to investorgain.com
Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Gala Precision Engineering shares was ₹769 apiece, which is 45.37% higher than the IPO price of ₹529.
'Grey market premium' indicates investors' readiness to pay more than the issue price.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
