Gala Precision IPO: The initial public offering of Gala Precision Engineering, which opened on September 2 for public subscription, is witnessing a strong response from investors. Till 11:27 am on the second day of bidding on Tuesday, the Rs 167.93-crore IPO received a 19.92 times subscription, garnering bids for 4,42,87,880 shares as against 22,23,830 shares on offer.
The category for non-institutional investors received 39.94 times subscription, while the portion for Retail Individual Investors (RIIs) got subscribed 21.95 times. The QIB category got 0.90 times subscription.
The IPO will be closed on September 4.
Gala Precision Engineering IPO GMP Today
According to market observers, unlisted shares of Gala Precision Engineering Ltd are trading Rs 268 higher in the grey market than its issue price. The Rs 268 grey market premium or GMP means the grey market is expecting a 50.66 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Gala Precision Engineering IPO: Analysts’ Recommendations
Most brokerage firms have given the ‘subscribe’ rating to the IPO, on the back of “fairly valued” PE ratio and growth prospects.
In its IPO note, BP Equities said, “On the upper price band, the issue is valued at a P/E of 24.3x based on FY24 earnings, which we feel is fairly valued compared to its listed peers. Therefore, we recommend a SUBSCRIBE rating to the issue from a medium to long-term perspective.”
Another brokerage firm Choice Broking has also given a ‘subscribe’ rating to the IPO. “With continued positive traction from the end-consuming sector, we forecast a 23.3% CAGR growth in the top-line over FY24-26E to Rs. 307.7cr. EBITDA margin is likely to be sustained around FY24 levels; however, with lower finance costs and the absence of exceptional items, adjusted PAT is estimated to increase by 22.8% CAGR to Rs. 37.2cr in FY26E. Post-issue, RoIC and RoE are estimated to be at 10.9% and 12.1%, respectively, in FY26E, compared to 10.7% and 10.3% in FY24.”
The company reported positive operating cash flows during the period, which increased by 1.9% CAGR. Average operating cash flow stood at Rs. 14.5cr. Total financial liabilities reported a modest decline of 0.7% CAGR. However, with better profitability, the debt-to-equity ratio improved to 0.6x in FY24, compared to 1.2x in FY21. Pre-issue average RoIC and RoE stood at 13.5% and 14.1%, respectively, during FY21-24, Choice Broking stated.
Swastika Investmart, Master Capital, Canara Bank Securities, and Reliance Securities have also given a ‘subscribe’ recommendation to the public issue.
Gala Precision Engineering IPO: More Details
The IPO is a combination of a fresh issue of 25.58 lakh equity shares worth Rs 135.34 crore and an offer-for-sale (OFS) of 6.16 lakh equity shares valued at Rs 32.58 crore by promoter group entities and individual shareholders. This aggregates the transaction size to Rs 168 crore at the upper-end of the price band of Rs 529.
Proceeds from the fresh issue will be used for setting up a new facility at Vallam-Vadagal, SIPCOT, Sriperumbudur in Tamil Nadu for manufacturing high tensile fasteners and hex bolts; purchase of equipment, plant and machinery at Wada, Palghar in Maharashtra; payment of debt and general corporate purposes.
Gala Precision Engineering is a precision component manufacturer of technical springs like disc & strip springs (DSS); coil & spiral springs (CSS) and Special Fastening Solution (SFS).
The company supplies its products to original equipment manufacturers (OEMs), Tier 1 and channel partners; used in sectors like renewable energy, including wind turbine and hydropower plants, various industrial sectors such as electrical, off-highway equipment, infrastructure and general engineering, mobility segments such as automotive and railways.
PL Capital Markets Pvt Ltd is the sole book-running lead manager to the issue.
The equity shares are proposed to be listed on BSE and NSE.
