IPO listed on 9 Sep'24
Gala Precision Engineering Ltd
Minimum Investment
₹ 14,812 / 28 shares
Grey market premium
₹ 240 (45% premium)
Issue price
₹ 529
Listing price
₹ 721
Listing day %
43%
Listing on
Sep 09, 2024
Our Verdict:
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- Gala Precision Engineering Ltd (GPEL) stands as a prominent manufacturer of precision components in India, with a dominant market share in disc and strip springs (DSS) used in the renewable industry.
- Despite recording nearly flat profits from continuing operations for FY24, the firm maintained robust topline and operating figures. The previous year's high base was influenced by exceptional items.
- The IPO is priced at a price-to-earnings (P/E) ratio of 30x based on FY24 earnings, which is lower than the industry average. The positive grey market premium also suggests a strong debut in the market.
- Given GPEL's attractive valuation, solid financial health, strong industry standing, and potential for growth, investors might consider subscribing to the IPO from a medium-to-long term perspective.
About the company
Founded in
23 Feb'09
Managing director
Kirit Gala
- GPEL specializes in manufacturing precision components, including disc and strip springs (DSS), coil and spiral springs (CSS), and specialized fastening solutions (SFS). These products are distributed to original equipment manufacturers (OEMs) in diverse sectors, including renewable energy, industrial, automotive, and railways, both in India and internationally.
- GPEL boasts a diverse product portfolio, offering more than 750 stock keeping units across various categories. It has a robust international presence, exporting to over 25 countries and serving more than 175 global customers, with exports accounting for 37.5% of its total revenue.
STRENGTHS
- Strong Market Position: GPEL commands a 2% share of the global market for DSS. It holds a dominant 10% share in the domestic market and is a significant player in the renewable industry’s DSS segment, with 70% of the domestic market and 3% of the global market.
- Impressive Growth Trajectory: GPEL has shown robust financial growth with its operating revenue and EBITDA experiencing compound annual growth rates (CAGRs) of 18% and 35% respectively, from FY22 to FY24. Its net profit, before accounting for exceptional items, has also seen a remarkable increase, growing at a CAGR of 91% during the same period.
- Improving Profit Margins: GEPL’s profit after tax (PAT) margins have significantly improved, rising from 4.48% in FY22 to 11.89% in FY24. The Return on Capital Employed (ROCE) has also seen a positive trend, increasing from 13.85% to 21.15%, calculated before exceptional items.
RISK FACTORS
- Client Concentration: In FY24, GPEL's top 3, 5, and 10 customers accounted for 24.33%, 32.46%, and 47.48% of total operational revenue, respectively. A loss of any major client or a reduction in their orders could significantly impact the company’s profitability.
- Legal Risks: GPEL faces a patent infringement lawsuit from Nord-Lock AB. An adverse verdict could have negative consequences on the company’s operations, financial condition, and future growth strategies.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 167.93 crore
Fresh Issue
₹ 135.34 crore
OFS
₹ 32.59 crore
Price range
₹ 503 - 529
Lot size
28 shares
Issue Objective
GPEL proposes to utilize the net proceeds from the fresh issue towards:
- Establishing a new manufacturing facility for high tensile fasteners and hex bolts;
- Allocating funds for capital expenditures, including the acquisition of equipment, plant, and machinery;
- Prepayment or repayment of certain outstanding borrowings; and
- General corporate purposes.
Dates
Bidding open
2 Sep'24
Bidding close
4 Sep'24
Allotment date
5 Sep'24
Refund date
6 Sep'24
Listing
9 Sep'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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