| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 503 to ₹ 526 | 28 | 02nd Sep, 2024 – 04th Sep, 2024 | ₹167.93 Cr |
About Gala Precision Engineering Ltd IPO
Gala Precision Engineering Ltd (GPEL) is a precision component manufacturer of technical springs like disc & strip springs (DSS) including wedge lock washers (WLW); coil & spiral springs (CSS) and special fastening solutions (SFS) with over thirty years of experience. These components are supplied to OEMs, Tier-1 and channel partners. The company caters to various sectors like renewable energy including wind turbine and hydro power plants, automotive, railways and various industrial segments such as electrical, off highway equipment, infrastructure and general engineering. GPEL’s business is primarily divided into two divisions; the springs technology division, which manufactures DSS, WLW & CSS and the SFS, which produces anchor bolts, studs and nuts. The spring technology contributes 80.11%
of the company’s revenue, while fastening and surface engineering solutions contributes 19.34% and 0.54% respectively in FY24. The company operates from its two manufacturing units in Wada, Palghar, Maharashtra, and holds all the certifications required to manufacture and supply its products including IATF16949 and ISO 9001:2015. These certificates enable the company to serve both domestic as well as international customers. The company generates the majority of its business from India, with 37.5% coming from the international market. GPEL has a global client base of over 175 customers and exports to 25 countries. The company has an annual production capacity of 246.46 million units of springs & washers and 0.42 million units of fasteners. GPEL plans to establish a new manufacturing facility in Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu, to develop various high tensile fasteners and new products like bolts, with the motive to expand its existing portfolio.
Objective of the Gala Precision Engineering Ltd IPO
The net proceeds from the fresh issue will be used towards the following purposes:
- 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 purchase of equipment, plant and machinery at Wada, Palghar, Maharashtra;
- Repayment/ prepayment, in full or part, of certain borrowings availed by our company; and
General corporate purposes.
Rationale To Invest In Gala Precision Engineering Ltd IPO
Comprehensive manufacturing facilities offering higher scale and flexibility
The company’s two manufacturing facilities in Wada are well-equipped with machinery, enabling them to design, develop, and produce a wide range of products. These facilities are certified with international standard including IATF 16949 for manufacturing of disc springs, spring band clamp, stamped components, coil springs and spiral springs, and ISO 9001:2015 for manufacturing and supply of disc springs, brush springs, spiral springs, retractor springs, spring cassette assemblies and special fasteners. The company also hosts state-of-the-art CNC machines, wafio Coiler from Germany and multi-side machines to meet to ensure that the company meets up to clients’ expectations. Additionally, the company also integrates software into its manufacturing processes which enables them eliminate production errors. GPEL’s ability to supply high precision and multi-purpose products can be largely attributed to its in-house product development team, which is situated in the manufacturing facility. The team currently uses design and development tools such as CAD software and iQbestspeed software to detect the ideal production speed and process safety of the springs to be produced. The company’s in-house process also includes tool design and development, blanking and forming, coiling, heat treatment, shot peening, surface finishing, springs grinding and chamfering, scragging, load testing along with inspection, quality control and surface treatments and coatings. All these processes enables the company to provide comprehensive solutions to their clients, while maintaining a strong hold over production. Such kind of integrated production process helps the company gain an edge over other competitors in terms of cost and scale.
Long-standing customer relationships and a diversified product portfolio
GPEL has over three decades of operational experience, which has allowed the company to establish many long standing relationships with their clients. This healthy supplier-customer relationship indicates the company’s strong commitment to providing quality and comprehensive solutions to its customers. Key factors that help the company maintain these relationships are high quality products, reliable supplies, development collaboration and adherence international standards. The company also engages with their clients through different stages of product development – from the design and validation stages to testing, final manufacturing, and delivery. The company also provides customized packaging and kitting services to its customers, which helps the company better understand the clients’ requirement and provide increased customer satisfaction. Moreover, the company also boasts a de-risked revenue break-up with its customers, with top five customers contributing 32% of the revenue and top 10 contributes to 47% of the revenue. GPEL’s wide range of products and their varied application have also helped them to develop a broad consumer base across geographies and industries. Owing to the company’s capability to design and develop various product according to the customer’s needs and specification, as well as cross sell multiple products to them, the company has successfully increased its wallet-share in the market.
Valuation of Gala Precision Engineering Ltd IPO
GPEL has a rich 30 years of experience in designing, manufacturing and application engineering of highperformance standardised and customised disc springs and strip springs. The industry in which the company operates has a significant entry barrier, owing to the stringent and lengthy qualification process for production of technical springs and fasteners due to the criticality of their usage. With the help of GPEL’s rich experience as precision component manufacturer, the company is a qualified and established supplier to
OEMs, Tier 1 and channel partners. With its highly equipped manufacturing units, GPEL is able to meet its clients’ different requirements, simultaneously enjoying the competitive advantage it gains owing to the inhouse facilities that it hosts alongside technological integration. With the Indian DSS, CSS, and WLW market expected to grow driven by key sectors like industrials, mobility and renewables, and with the rapid growth trend witnessed in urban and rural economy, the company is well positioned to benefit from the economic tailwinds. The company’s plan to set up a new manufacturing unit, purchase of new machinery for its existing units as well as the aim to replace European imports in the market aligns well with the economic development and paves way for the company to enjoy increased market-share. On the financial front, company’s Revenue/EBITDA/PAT grew at a CAGR of 18.1%/40.4%/83.5%, respectively between FY22 and FY24. The company maintains a ROCE of 21.15% and ROE of 23.27 (before exceptional item). The company has a D/E ratio of 0.53, and further plans to reduce its debt by using the amount raised to pay off its debt and make prepayments of some of the borrowings the company availed. 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.
What is the Gala Precision Engineering Ltd IPO?
Gala Precision Engineering IPO is a book built issue of Rs 167.93 crores. The issue is a combination of fresh issue of 0.26 crore shares aggregating to Rs 135.34 crores and offer for sale of 0.06 crore shares aggregating to Rs 32.59 crores.
How to apply for the Gala Precision Engineering Ltd IPO through Stoxbox?
To apply for the Gala Precision Engineering Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Gala Precision Engineering Ltd IPO open?
Gala Precision Engineering Ltd IPO is opening on 02nd September 2024
What is the lot size of the Gala Precision Engineering Ltd IPO?
The Lot Size of Gala Precision Engineering Ltd IPO is 28 equity shares
When is the Gala Precision Engineering Ltd IPO allotment date?
The allotment Date for Gala Precision Engineering Ltd IPO is 05th September 2024
When is the Gala Precision Engineering Ltd IPO listing date?
The listing Date for Gala Precision Engineering Ltd IPO is 09th September 2024
What is the minimum investment required for the Gala Precision Engineering Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,812
What is the maximum investment allowed for the Gala Precision Engineering Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 192,556
What are the risks associated with investing in the Gala Precision Engineering Ltd IPO?
- The company does not have any exclusive arrangements with its customers, which means long-term supply orders are not guaranteed. As a result, its sales may fluctuate significantly from period to period due to changes in customer vendor preferences, and the company may be unable to secure repeat orders.
- GPEL do not have long term contracts or exclusive arrangements with any of its suppliers, and a significant increase in the cost of, or a shortfall in the availability, or deterioration in the quality, of such input materials could have an adverse effect on our business and results of operations.
- Failure to obtain or renew approvals, licenses, registrations and permits to operate its business in a timely manner, or at all, may adversely affect the business.
When will the Gala Precision Engineering Ltd IPO shares be credited to my Demat account?
The Gala Precision Engineering Ltd IPO be credited to the account on allotment date which is 05th September 2024
Where can I find the Gala Precision Engineering Ltd IPO prospectus?
The prospectus of Gala Precision Engineering Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Gala Precision Engineering Ltd IPO?
| IPO Open Date | Monday, September 2, 2024 |
|---|---|
| IPO Close Date | Wednesday, September 4, 2024 |
| Basis of Allotment | Thursday, September 5, 2024 |
| Initiation of Refunds | Friday, September 6, 2024 |
| Credit of Shares to Demat | Friday, September 6, 2024 |
| Listing Date | Monday, September 9, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on September 4, 2024 |
