Gala Precision Engineering IPO: Review, Valuation, Date & GMP

Gala Precision Engineering IPO-Complete Overview

Gala Precision Engineering IPO a Mainboard IPO is a book-built issue of Rs.167.93 crore (3,174,416 Shares) by Gala Precision Engineering Ltd. The company was founded in February 2009 and specializes in producing precision components, including coil and spiral springs (CSS), disc and strip springs (DSS), and special fastening solutions (SFS). The company provides these goods to producers of original equipment (OEMs).

The company's products are utilized in mobility segments including automobile and railway, as well as in industries like electrical, off-highway equipment, infrastructure, and general engineering.

The company is a leading producer of disc springs in the Indian market, accounting for around 10% of the total market share. In the DSS market, the company has about 70% domestic market share and about 3% global market share in the renewables industry.  

The company is an essential link in the global supply chain for OEMs, having supplied its high-tensile fasteners and specialized springs to customers in Germany, Denmark, China, Italy, Brazil, the USA, Sweden, and Switzerland.

The company's operations are mostly divided into two divisions:

(i) Wedge Lock Washers (WLW) & CSS and other DSS are produced by the Springs Technology Division.

(ii) SFS, which manufactures nuts, studs, and anchor bolts.

The company served more than 175 clients as of March 30, 2024, across more than 25 nations, including Germany, Denmark, China, Italy, Brazil, the United States, Sweden, and Switzerland.

The company designs, develops, and produces a wide range of products at its two manufacturing facilities in Palghar, Maharashtra's Wada District. Furthermore, a new production plant is being established in Vallam-Vadagal, SIPCOT, Sriperumbudur, Tamil Nadu, with an emphasis on creating high-tensile fasteners to add new items to the portfolio, such as bolts.

This new IPO is to be launched on 02 September 2024, and its ‘initial public offering’ will end on 04 September 2024.

 

Gala Precision Engineering IPO Overview

The Rs.167.93 crore Gala Precision Engineering Ltd. IPO comprises a combination of a fresh Issue of 0.26 crore Shares amounting to Rs.135.34 crore and an Offer for Sale (OFS) of 0.06 crore Shares amounting to Rs.32.59 crore out of which 35% is allocated to retail investors, 50% to institutional investors and 15% to non-institutional investors. 

The IPO date is from 02 September to September 04, 2024. The IPO listing is on Monday, September 09, 2024, and it will be held on the BSE and NSE. Gala Precision Engineering IPO price band is between Rs.503 to Rs.529 for each Share.

If You want to apply for the IPO, Click Here to Open a Demat Account.

 

Company Financial

The company’s revenue increased by 22% and PAT decreased by 8% during FYs ending 31 March 2024 and 31 March 2023

Below is the synopsis of the company's financial data (Restated Consolidated) for the financial year that concluded on 31 March 2024.

• The total assets of the company are Rs.188.69 crore.

• The company’s total revenue is over Rs.204.38 crore.

• The company’s PAT is Rs.22.33 crore.

• The net worth of the company is Rs.104.45 crore.

• The company's EBITDA is Rs.40.58 crore.

(Amount in Crore)

 

Revenue Bifurcation

Below is the revenue breakdown for various activities.

(Amount in Million)

 

Product-wise Bifurcation of Revenue From Operations During Last Three Fiscals

(Values in Million)

Geography-wise Revenue Bifurcation For The Last Three Fiscals

(Values in Million)

The Objective of The Issue

The company desires to use the Net Proceeds from the Issue to fulfill its following goals:

• Creating a new factory to produce hex bolts and high tensile fasteners at Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu.

• Financing the capital investment needed to buy machinery, plant, and equipment in Wada, Palghar, Maharashtra.

• Repayment of all or a portion of some outstanding loans that the company has taken out.

• General corporate purposes.

 

Peers of Gala Precision Engineering  Ltd.

 

Evaluation

The Gala Precision Engineering IPO price is between Rs.503 to Rs.529 for each Share.

Evaluation of P/E Ratio

Considering the FY 2024, with an EPS of Rs.22.09 from the last year, the resulting P/E ratio is 23.95x.

Considering the weighted EPS of Rs.20.13 for the last three years, the P/E ratio is 26.28x.

Comparative Analysis with Listed Peers

The average P/E Ratio of the industry is 39.59x.

In simple words, the P/E ratio of Gala Precision Engineering IPO (23.95x), compared with the industry’s average P/E of 39.59x, has an undervaluation (on a P/E ratio basis only). Hence the price of the Share seems fairly priced for the investors when considered based on the average P/E ratio of the industry.

Note: The EPS and weighted EPS of the company are after exceptional items and the industry P/E Ratio is computed based on the closing market price of the Share as of 09 August 2024.

 

IPO's Strengths 

• The company is a reputable provider of precise engineering solutions, offering a wide range of products to suit various market segments.

• It has been in business for more than 15 years with OEM and Tier 1 clients in India and around the world.

• It offers size, flexibility, and comprehensive solutions through its well-equipped production facilities, in-house design, and other capabilities.

• Its vast, diversified, and competent workforce is backed by an experienced management team.

• It has a history of integrating steady financial growth and performance that is marked by high levels of repeat business and operational efficiency.

• The ‘Great Place to Work’ Institute, India, has accredited the company as a ‘Great Workplace’ in the "Mid-size organizations" category. The certification will become void in November 2024.

 

IPO’s Weaknesses

• Its business's ‘spring technology division’ is what generates the majority of its revenue. Any decline in the spring technology market could harm its operations, financial position, cash flow, and business.

• Its production plants rely on a steady and sufficient supply of fuel, water, and electricity. Shortages or interruptions in these resources could cause disruptions in business operations, increase operating expenses, and ultimately reduce operating profits.

• Since a large amount of its revenue comes from a small number of application sectors, the performance of these industries is crucial to the operation of the organization. Any decline in the application industries could harm the company.

• It ships goods to the USA, China, Brazil, Germany, Switzerland, Finland, Italy, and Denmark, among other nations. Any unfavorable occurrences that affect these nations, including changes in exchange rates, the depreciation of the Indian rupee, and the need to comply with a variety of international regulations and laws, could negatively affect the operations, financial situation, and business.

• Its inability to recognize and comprehend changing consumer preferences and market trends to create new items that satisfy their needs or its limitations as a result of learning about new markets it is entering could harm the company.

 

Gala Precision Engineering IPO GMP Today

Its IPO GMP today has not started yet as of 27 August 2024.

 

Gala Precision Engineering IPO Timetable (Tentative)

The IPO open date is from September 02 to September 04, 2024, with IPO allotment on September 05, 2024, refund initiation on September 06, 2024, and listing on September 09, 2024.

 

Gala Precision Engineering IPO Details 

The IPO with a face value of Rs.10 per Share is set to start on September 02, 2024, close on September 04, 2024, and offers a total issue size of 3,174,416 Shares between Rs.503 to Rs.529 per Share with a Lot size of 28 Shares and will be listed at BSE and NSE.

 

Gala Precision Engineering IPO Lot Details 

The IPO allows retail investors to invest in a minimum and maximum of 1 Lot (28 Shares) amounting to Rs.14,812, and 13 Lots (364 Shares) amounting to Rs.192,556 respectively, while for HNI investors, the minimum Lot is 14 (392 Shares) amounting to Rs.207,368.

Gala Precision Engineering IPO Reservation

Promoters and Management of Gala Precision Engineering  Ltd.

• Kirit Vishanji Gala.

• Smeet Kirit Gala.

 

Gala Precision Engineering IPO Lead Managers

• Pl Capital Markets Private Limited.

Dividend Policy

The company has not paid any dividends during the last three FYs.

Conclusion

The company has experienced negative cash flow in investing activities and financing activities in the last few fiscal years. To fulfill its objectives, the company is currently conducting an IPO for the public.

We believe the information offered in this blog helps you learn about the company's financial performance. So this blog will be very useful to you if you are looking for information about the approaching IPO since it will give you reliable information about the company's, insights, financials, and past performance. If this informative blog piques your interest, you may be interested in reading our other related and useful posts on our website.

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

To Read the Prospectus of the Company Click Here to Download the DRHP.

Disclaimer: This IPO analysis is only for informational purposes and should not be considered as investment advice. Always do your research and consult with a financial advisor.

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