Gala Precision Engineering Limited is a prominent player in the design and manufacturing of precision components such as High Tensile Fasteners, Disc & Strip Springs, Coil & Spiral Springs, and Wedge Lock Washers. With a diverse clientele that includes major OEMs, Tier-1 suppliers, and channel partners across sectors like Renewable Energy, Industrial, and Mobility, Gala Precision has established a robust presence in its industry. The company is now moving forward with its Initial Public Offering (IPO). Here’s a detailed overview for potential investors.

IPO Overview

The Gala Precision Engineering IPO is a book-built issue totaling ₹167.92 Crores. This comprises:

Fresh Issue: 2.55 Lakh shares worth ₹135.34 Crores

Offer for Sale: 0.61 Lakh shares totaling ₹32.58 Crores

The subscription period for the IPO begins on September 02, 2024, and ends on September 04, 2024. The allotment is expected to be finalized on September 05, 2024, with the shares listed on BSE NSE and a tentative listing date of September 09, 2024.

The share price band is set between ₹503 and ₹529 per equity share, with a minimum lot size of 28 shares. Retail investors must invest a minimum of ₹14,812, while High-Net-Worth Individuals (HNIs) need to invest in 14 lots (392 shares), amounting to ₹207,368.

Lead Manager and Registrar

PL Capital Markets Private Limited is the book-running lead manager.

Link Intime India Private Limited is the registrar for the issue.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Gala Precision Engineering is projected to range between ₹250 and ₹270. It is crucial to note that GMP is not a reliable indicator of actual listing price as it reflects informal market demand and supply. The GMP is provided here solely for educational and informational purposes.

Live Subscription Status

As of 05:55 PM on September 04, 2024, the Gala Precision Engineering IPO has been subscribed 117.58 times on its last day of the subscription period. For up-to-date subscription status, investors can check the BSE website.

Allotment Status

The IPO allotment for Gala Precision Engineering is set for September 05, 2024. Investors can check their allotment status by:

Navigating to the IPO allotment status page.

Selecting Gala Precision Engineering Limited IPO from the dropdown list.

Entering the application number, PAN, or DP Client ID.

Submitting the details to view the allotment status.

Objectives of the IPO

The proceeds from the fresh issue will be allocated as follows:

₹370.00 Million for setting up a new facility in Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu, for manufacturing high tensile fasteners and hex bolts.

₹110.69 Million for capital expenditures towards purchasing equipment, plant, and machinery at Wada, Palghar, Maharashtra.

₹454.30 Million for repayment/prepayment of certain borrowings.

General corporate purposes.

Financial Performance and Valuation

Gala Precision Engineering has shown strong financial growth:

Revenue increased from ₹1,367.35 Million in FY22 to ₹1,493.84 Million in FY23, and currently stands at ₹1,767.90 Million in FY24.

EBITDA grew from ₹1,479.63 Million in FY22 to ₹1,670.82 Million in FY23, and is now at ₹2,043.77 Million in FY24.

PAT rose from ₹66.31 Million in FY22 to ₹225.63 Million in FY23, with a slight decrease to ₹225.32 Million in FY24.

For the IPO, the company is offering shares at a pre-issue EPS of ₹22.28 and a post-issue EPS of ₹17.78. The pre-issue P/E ratio stands at 23.74x, while the post-issue P/E ratio is 29.75x compared to the industry P/E ratio of 31.70x. The company’s Return on Capital Employed (ROCE) for FY24 is 19.91%, and Return on Equity (ROE) is 23.59%. These metrics suggest that the IPO is fairly priced.

Investment Recommendation

The Grey Market Premium (GMP) suggests potential listing gains of 47% - 50%. Considering the company's financial performance and the IPO’s valuation, it is recommended that investors consider applying for the Gala Precision Engineering Limited IPO for potential listing gains or long-term investment.

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