Gala Precision Engineering Ltd IPO Opens for Subscription - 7 Key Things You Should Know
The initial public offering (IPO) of Maharashtra-based precision component manufacturer Gala Precision Engineering Ltd has opened for subscription. The company plans to mop up ₹167.93 crores in the upper price band through the IPO. The IPO consists of a fresh issue and an offer for sale. If you look forward to investing in the IPO of Gala Precision Engineering Ltd, here are some important things you should know.
1. About Gala Precision Engineering Ltd
Gala Precision Engineering Ltd is a precision component manufacturer of technical springs like disc and strip springs (DSS), including wedge lock washers (WLW), coil and spiral springs and special fastening solutions, supplying to original equipment manufacturers (OEMs), Tier 1 players and channel partners.
The company's products find their usage in sectors like renewable energy, including wind turbine and hydropower plants, various industrial sectors, such as electrical, off-highway equipment, infrastructure and general engineering, and mobility segments, such as automotive and railways. Gala Precision Engineering has a strong global presence across 25+ global export countries with an office in Frankfurt, Germany, to better service their European clientele.
2. Gala Precision Engineering Ltd IPO Details
The IPO of Gala Precision Engineering Ltd, which opened today, will close on 4th September. Here are other IPO details:
| Particulars | Lot size, price and other details |
|---|---|
Number of equity shares in fresh issue | Up to 2,558,416 |
Number of equity shares in offer for sale | Up to 616,000 equity shares |
Price range | ₹ 503 - ₹ 529 |
Minimum investment | ₹ 14,812 |
Investment lot | 28 shares |
IPO size | ₹ 167.93 crores in the upper price band |
Book running lead manager | PL Capital Markets Pvt Ltd |
IPO registrar | Link Intime India Private Limited |
3. Use of IPO proceeds
Gala Precision Engineering Ltd plans to utilise the net proceeds received from the IPO for:
- Setting up a new facility at Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu, for manufacturing high-tensile fasteners and hex bolts
- Funding capital expenditure requirements towards the purchase of equipment, plant and machinery at Wada, Palghar, Maharashtra
- Repayment/ prepayment, in full or part, of certain borrowings availed by the company
- General corporate purposes
4. Financial snapshot
Before investing in a company’s IPO, you need to know its key financials, and Gala Precision Engineering Ltd is no different. The table captures certain vital financial metrics of Gala Precision Engineering Ltd across different financial years:
| Particulars | FY 24 | FY 23 | FY 22 |
|---|---|---|---|
Total equity and liabilities (in ₹ crores) | 188.685 | 170.386 | 145.617 |
Total income (in ₹ crores ) | 204.377 | 167.082 | 147.963 |
Total expenses (in ₹ crores) | 176.790 | 149.384 | 136.735 |
Gross profit (in ₹ crores) | 119.798 | 98.676 | 86.084 |
Gross profit % | 59.15% | 59.64% | 59.26% |
5. Offer structure
Here’s how the offer is allocated for different categories of investors:
| Investor category | Percentage of offer available |
|---|---|
Qualified institutional bidders | Not more than 50% of the net offer |
Non-institutional bidders | Not less than 15% of the net offer |
Retail individual bidders | Not less than 35% of the net offer |
6. Competitive strengths of Gala Precision Engineering Ltd
Gala Precision Engineering Ltd has the following strengths:
- Well-established manufacturer of precision engineering components with a diversified product portfolio and diverse market
- Long-standing customer relationships with both Indian and global OEM and Tier 1 players
- Well-equipped manufacturing facilities, along with in-house design and other capabilities which offer scale, flexibility, and comprehensive solutions
- Experienced management team supported by a large, diverse and skilled workforce
- Track record of consistent financial growth and performance characterised by operational efficiency and high repeat business
7. Industry overview
The global DSS & WLW market was valued at USD 891M in CY23, witnessing a CAGR of ~6% during CY 20-23. The DSS & WLW market is expected to reach a value of ~ USD 1,065M in CY26, witnessing a growth of 6.1% during CY 23-26. Renewable energy, along with automobiles and infrastructure, are likely to drive the growth of this market.
Wrapping it up
Talk to your broker if you wish to apply for this IPO. However, you also need to do your homework and ensure the IPO aligns with your overall financial goals and risk tolerance.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.
