What You Must Know About Gala Precision Engineering IPO: Price Band ₹503 to ₹529 Per Share

Incorporated in February 2009, Gala Precision Engineering Limited manufactures precision components such as disc and strip springs (DSS), coil and spiral springs (CSS), and special fastening solutions (SFS). The company supplies these products to original equipment manufacturers (OEMs).

The company's products are used in sectors such as electrical, off-highway equipment, infrastructure, and general engineering, as well as in mobility segments such as automotive and railway.

The company has supplied its technical springs and high-tensile fasteners to customers in several countries, including Germany, Denmark, China, Italy, Brazil, the USA, Sweden, and Switzerland, making it a crucial link in the global supply chain for OEMs.

The company's business primarily comprises two divisions: (i) the Springs Technology Division manufactures DSS, including Wedge Lock Washers (WLW) and CSS, and (ii) SFS, which produces anchor bolts, studs, and nuts.
As of March 30, 2024, the company had more than 175 customers in 25+ countries, including Germany, Denmark, China, Italy, Brazil, the USA, Sweden, and Switzerland.

The company has two manufacturing facilities in Wada District, Palghar, Maharashtra, with capabilities to design, develop, and manufacture a diverse product portfolio. Additionally, a new manufacturing facility is being set up in Vallam-Vadagal, SIPCOT, Sriperumbudur, Tamil Nadu, focusing on developing high-tensile fasteners to expand the product portfolio with new products like bolts.

As of June 30, 2024, the company has 294 permanent and 390 contract employees. The permanent workforce includes 182 manufacturing workers, 19 employees for stores and logistics, 19 employees for quality assurance, 14 employees for tool room development and maintenance, and 22 employees for human resources and administration.

The Objective of the Issue 

The company proposes to utilise the Net Proceeds towards funding the following objects:

1. Setting up a new facility at Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu, for manufacturing high tensile fasteners and hex bolts.

2. Funding capital expenditure requirements towards the purchase of equipment, plant and machinery at Wada, Palghar, Maharashtra.

3. Repayment/ prepayment, in full or part, of certain borrowings availed by the company; and
General corporate purposes.

Highlights of the Gala Precision Engineering IPO 

Gala Precision Engineering Limited is launching its IPO on the BSE and NSE. Here are the key details of the IPO:

• The issue opens for subscription on 2nd September 2024 and closes on 4th September 2024. 
• Gala Precision Engineering IPO shares have a face value of ₹10 per share. 
• This is a book-built issue with the price band set at ₹503 to ₹529 per share. 
• The IPO consists of a fresh issue component of 2,558,416 shares and an offer for sale (OFS) portion of 616,000 shares. 
• The company will issue 3,174,416 shares, which amounts to a fundraising of ₹167.93 crore. 
• The promoter holding in the company currently stands at 74.56%. 
• Pl Capital Markets Private Limited is the book-running lead manager for the issue, and Link Intime India Private Ltd is the registrar.

Gala Precision Engineering IPO: Key Dates

The Gala Precision Engineering IPO opens on Monday, 2nd September 2024 and closes on Wednesday, 4th September 2024. The bid dates are from 2nd September 2024, at 10:00 AM to 4th September 2024, at 5:00 PM. The cut-off time for UPI mandate confirmation is 5 PM on the issue closing day, 4th September 2024.

Gala Precision Engineering IPO Issue Details/ Capital History 

Gala Precision Engineering IPO is set to raise ₹167.93 crore through Initial Public Offering (IPO). The issue comprises 3,174,416 equity shares with a face value of ₹10 each, priced between ₹503 and ₹529 per share. The Gala Precision Engineering IPO will open for subscription on 2nd September 2024 and close on 4th September 2024. Investors can apply for a minimum of 28 shares. The company's shares will be listed on the BSE and NSE post-issue. Pl Capital Markets Private Limited is the book running lead manager, while Link Intime India Private Ltd is the registrar.
IPO Allocation and minimum investment lot size 

Gala Precision Engineering IPO has announced the breakdown of the overall IPO allocation to various categories as follows:

The minimum lot size for IPO investment is 28 shares. Retail investors can invest a minimum of ₹14,812 (28 x ₹529 per share at the upper price band) in the IPO. This is also the maximum that retail investors can invest. The table below shows the break-up of lot sizes for different categories:

Financial Highlights: Gala Precision Engineering IPO

The table below presents the key financials of Gala Precision Engineering Limited for recent periods:

Gala Precision Engineering Limited's revenue increased by 22% from ₹167.08 Crore in FY2023 to ₹204.38 Crore in FY2024. However, the profit after tax (PAT) dropped by 8% from ₹24.21 Crore in FY2023 to ₹22.33 Crore in FY2024.
The company's Net Worth has consistently increased, from ₹59.32 Crore in FY2022 to ₹83.66 Crore in FY2023 and further to ₹104.45 Crore in FY2024, indicating a strengthening financial position.

The company has managed to reduce its Total Borrowing from ₹58.6 Crore in FY2023 to ₹55.03 Crore in FY2024, suggesting improved financial management and reduced reliance on debt. This is also reflected in the improved Debt-Equity ratio, which decreased from 0.70 in FY2023 to 0.53 in FY2024.

The EBITDA Margin has shown improvement, increasing from 22.56% in FY2023 to 24.59% in FY2024, indicating better operational efficiency.