5 min read Last Updated : Sep 02 2024 | 10:32 AM IST
Gala Precision Engineering IPO: The initial public offering (IPO) of precision component manufacturer Gala Precision Engineering opens for public subscription today. The IPO, which is a book-built issue, aims to raise Rs 167.93 crore by offering a fresh issue of 2,558,416 equity shares, and an offer for sale of 616,000 shares with a face value of Rs 10 each. Gala Precision Engineering has announced that it has raised Rs 50.29 crore from anchor investors in the bidding that closed on August 30, 2024, ahead of the public issue opening.
As the Gala Precision Engineering IPO opens for public subscription today, several brokerages, including Deven Choksi Research, Anand Rathi Research Team, Swastika Investmart, and Choice, have shared their views on the IPO for investors. Before delving into the brokerages’ calls, let’s review the key details of the Gala Precision Engineering public issue.
The three-day subscription window for the Gala Precision Engineering IPO, available at a price band of Rs 503-529 and a lot size of 28 shares, ends on Wednesday, September 4, 2024. Investors can bid for a minimum of 28 shares of Gala Precision Engineering, in multiples thereof. The minimum amount to bid for the IPO for retail investors is Rs 14,812.
Once the subscription window ends, the basis of allotment for Gala Precision Engineering shares is likely to take place on Thursday, September 5, 2024, while the company’s shares will be credited into demat accounts on Friday, September 6, 2024.
Shares of Gala Precision Engineering are scheduled to debut on the bourses on Monday, September 9, 2024, with listings on BSE and NSE.
The company has stated that PL Capital Markets is the book-running lead manager for the Gala Precision Engineering IPO, while Link Intime India is the registrar for the issue.
Gala Precision Engineering IPO grey market premium (GMP)
Adding to the buzz, the unlisted shares of Gala Precision Engineering are commanding a strong premium on the first day of its opening, indicating favourable sentiment for the public issue among investors. According to several sources tracking grey market activities, Gala Precision Engineering shares are trading at a premium of Rs 240, or 45.37 per cent on the upper end of the issue price.
Gala Precision Engineering IPO objective
The company plans to use the Net Proceeds for establishing a new facility in Vallam-Vadagal, Tamil Nadu for manufacturing fasteners; purchasing equipment and machinery in Wada, Maharashtra; repaying or prepaying existing borrowings; and general corporate purposes.
Precision Engineering IPO review
Should you bid for the Gala Precision Engineering IPO?
Deven Choksi Research – Subscribe
Analysts at Deven Choksi Research remain bullish on the Gala Precision Engineering IPO and recommend investors apply for the public issue. According to their report, Gala Precision Engineering is well-positioned to leverage its strong foothold in the precision components industry amidst a favourable market environment, marked by robust growth in the renewable energy and automotive sectors.
The brokerage believes that the expansion of its manufacturing facilities and the introduction of new products will enable the company to capture additional market share in both domestic and international markets. “The company is valued at an adjusted P/E of 30x, which is trading at a discount compared to its peers. Given the favourable industry trends and its strategic advantages, we assign a Subscribe rating to the IPO,” said Deven Choksi Research.
Swastika Investmart – Subscribe
Swastika Investmart has also assigned a Subscribe rating to the Gala Precision Engineering IPO. The brokerage highlighted that the company has consistently demonstrated robust revenue growth. While profitability has experienced minor fluctuations, the overall financial performance remains positive. According to the brokerage, the IPO’s valuation aligns with industry benchmarks.
“Given current market trends and the increasing demand for precision components, GPEL is poised for a successful listing and sustained growth,” said Swastika Investmart in its report.
Anand Rathi Research Team – Subscribe
Analysts at the Anand Rathi Research Team are bullish on the Gala Precision Engineering IPO and recommend subscribing to the public issue from a medium to long-term perspective. According to the brokerage, the company maintains an ROCE of 21.15% and an ROE of 23.27% (before exceptional items). The company has a D/E ratio of 0.53 and plans to use the raised funds to pay off debt and make prepayments on some borrowings.
“At 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 for the issue from a medium to long-term perspective,” said the brokerage in its report.
Choice – Subscribe
The brokerage has assigned a Subscribe rating to the Gala Precision Engineering IPO. According to Choice, at the higher price band, GPEL is demanding an EV/Sales multiple of 2.9x, which is a discount to the peer average of 4.7x. Thus, the issue is attractively priced. “We anticipate continued higher demand for its products from end-consuming sectors like renewables, industrials, and railways. Considering the dominant market position, global Tier-1 client base, and attractive valuation, we assign a Subscribe rating for the issue,” said Choice in a report.
About Gala Precision Engineering
Gala Precision Engineering is a manufacturer specialising in precision engineering components, offering a broad and varied product portfolio across multiple markets. The company plans to further develop its expertise in key sectors such as renewable energy, industrial, and mobility by continuously reinforcing its core strengths in precision engineering for sustainability.
First Published: Sep 02 2024 | 10:15 AM IST
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