Gala Precision IPO: Price Band Fixed, Issue Opens September 2
Gala Precision IPO
Gala Precision Engineering IPO: Price Band Fixed at Rs 503-529 per Share, Subscription Opens on September 2
Gala Precision Engineering Limited, a prominent player in the technical springs and fastening solutions industry, has officially announced the price band for its Initial Public Offering (IPO).
The company has set the offer price range between Rs 503 and Rs 529 per share. The IPO is slated to open for public subscription on September 2, 2024.
In anticipation of the public offering, there will be an anchor investor subscription window on August 30, 2024.
Once the subscription period concludes, Gala Precision Engineering’s shares are expected to be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
IPO Structure and Details
Gala Precision Engineering’s IPO will comprise the issuance of 25.58 lakh new equity shares, which are expected to raise Rs 135.34 crore.
Additionally, the company will offer 6.16 lakh equity shares for sale under the Offer for Sale (OFS) mechanism, amounting to Rs 32.58 crore.
This brings the total amount to be raised through the IPO to approximately Rs 167.93 crore. The estimated market capitalization of the company post-IPO is projected to be around Rs 670 crore.
For investors, the IPO provides a compelling opportunity, with a minimum application lot size set at 28 shares. Retail investors will need to invest a minimum of ₹14,812 to participate in the offering.
Following the subscription period, the allotment of shares to successful investors is anticipated to occur on September 5, 2024. The shares are expected to be listed and commence trading on September 9, 2024.
Company Overview and Business Operations
Founded in 2002, Gala Precision Engineering Limited is headquartered in Palghar, Maharashtra, where it operates two state-of-the-art manufacturing facilities.
The company specializes in the production of a wide range of technical springs, including disc springs, strip springs, coil springs, and spiral springs.
Additionally, it offers specialized fastening solutions. These products are crucial components for various sectors, including renewable energy, electrical, off-highway equipment, infrastructure, general engineering, automotive, and railways.
Gala Precision Engineering has established itself as a leading manufacturer of disc springs in the domestic market, claiming a 10% market share in India.
The company is particularly dominant in the renewable energy sector, where it holds a remarkable 70% share in the domestic market for disc and strip springs.
On the global stage, Gala Precision Engineering maintains a 3% market share in the disc springs sector. This strong market presence underscores the company’s significant role in both national and international markets.
Competitive Landscape
In the highly competitive technical springs and fastening solutions industry, Gala Precision Engineering faces competition from several notable companies.
These include Harsh Engineers International, SKF India, Sundaram Fasteners, Rolex Rings, Sterling Tools, and Ratnaveer Precision Engineering.
Despite this competitive environment, Gala Precision Engineering’s focus on quality and technological innovation has allowed it to maintain a strong market position.
The company derives more than 80% of its revenue from its springs technology business. The remaining revenue is generated from its fastening solutions segment (19.3%) and surface engineering solutions (0.5%).
This diversified revenue stream reflects the company’s strategic approach to addressing the needs of various industries and market segments.
Financial Performance
Gala Precision Engineering has demonstrated solid financial performance in recent years. For the fiscal year ending March 2024, the company reported a nearly stable profit from operations of Rs 22.53 crore.
This represents a marginal decline of 0.14% from the Rs 22.56 crore reported in the previous fiscal year. Despite this minor decrease in operational profit, the company faced an exceptional loss of Rs 2.3 crore compared to an exceptional gain of Rs 9.76 crore in the previous year. This shift reflects the broader market and operational challenges faced by the company.
On a positive note, Gala Precision Engineering experienced a significant increase in revenue, which grew by 22.4% year-on-year to reach Rs 202.5 crore for FY24.
The company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) saw a substantial rise of 41.8%, reaching Rs 38.8 crore.
This increase in EBITDA is accompanied by an expansion in profit margins, which improved by 260 basis points to 19.1% compared to the previous fiscal year.
These financial metrics highlight the company’s robust operational efficiency and its ability to manage costs effectively while driving revenue growth.
Use of Proceeds
The funds raised through the IPO will be utilized for various strategic purposes, including expanding the company’s production capacity, investing in research and development, and enhancing its technological capabilities.
The IPO proceeds will also be allocated towards strengthening the company’s balance sheet and supporting its future growth initiatives.
Management and Advisory
The IPO is being managed by PL Capital Markets Private Limited, which serves as the Book Running Lead Manager for the offering. Link Intime India Private Limited has been appointed as the Registrar to the Issue.
The company’s promoters, Kirit Vishanji Gala and Smeet Kirit Gala, bring significant industry experience and strategic vision to the organization.
Their leadership has been instrumental in driving the company’s growth and establishing its strong market presence.
Final Remarks
The Gala Precision Engineering IPO presents an exciting investment opportunity for both institutional and retail investors.
With a well-defined price band, a solid financial track record, and a strong position in the technical springs and fastening solutions market, the IPO is poised to attract significant interest.
Investors will have the chance to participate in the growth of a leading player in the sector, with a promising outlook for future expansion and development.
As the company prepares for its public debut, all eyes will be on the subscription results and the subsequent performance of its shares in the stock market.
