What you must know about the Global Surfaces IPO

Global Surfaces Limited, as the name suggests, is into the processing natural stones and manufacturing engineered quartz out of that. Rajasthan has traditionally been known for its exquisite stones, including marble, and that is where the company is based. Global Surfaces Ltd works on processing various natural stones formed through complex geological processes like granite, limestone, marble, quartzite, travertine etc. To process these stones, Global Surfaces Ltd has 2 units. While one unit is located at the RIICO Industrial Area, Jaipur; the other unit is located at the Mahindra World City SEZ, Jaipur. Some of the popular products of Global Surfaces Ltd find applications in flooring, wall cladding, countertops, cut-to-size, and other items. Apart from finding applications in commercial locations and residential units in India, these processed stones are also extensively exported out of India.

Its polished stones find applications in India and abroad. In India, some of its popular users include the Delhi Metro, Manipal University in Jaipur and in a host of global locations too. Some of the famous global clients of Surface Technologies include Hilton Garden Hotel, Durham, Hilton Garden, Hoffman (US), Dubai International Airport, Burj Khalifa Tower Dubai, Zabeel Palace etc. Global Surfaces Ltd was founded in Jaipur in 2004 and largely specializes in revolutionising quartz into smart designs for surfaces.

Key terms of the Global Surfaces Ltd: IPO issue

The IPO of Global Surfaces Ltd entails the issue of 110.70 lakh shares with the price band yet to be decided. Out of the total sale of 110.70 lakhs shares as part of the IPO, the company will sell 85.20 lakh share by way of a fresh issue and the balance 25.50 lakh shares by way of an offer for sale (OFS). While Unistone Capital Private Ltd will be the lead manager to the IPO, Bigshare Services Private Limited will be the registrar to the issue. The company was promoted by Mayank Shah. The fresh portion of the IPO will be used for investing in its wholly owned subsidiary Global Surfaces FZE Ltd, to part finance its capex to set up an engineering quarts manufacturing facility in the Jebel Ali Free Trade Zone in Dubai.

As per the terms of the offer, 50% of the net offer is reserved for the qualified institutional buyers (QIBs), while 35% of the total issue size is reserved for the retail investors. The residual 15% is kept aside for the HNI / NII investors . The company has a par value of Rs10 per share and post the IPO, the stock of Global Surfaces Ltd will be listed on the NSE and on the BSE. The pre-issue ownership of the promoters stands at 99.35% and this is likely to get diluted post the IPO, where there will be equity dilution and also distribution of ownership through the offer for sale (OFS).

Key dates for the Global Surfaces IPO and how to apply?

The issue opens for subscription on 13th March 2023 and closes for subscription on 15th March 2023 (both days inclusive). The basis of allotment will be finalized on 20th March 2023 and the refunds will be initiated on 21st March 2023. In addition, the demat credits are expected to happen on 22nd March 2023 and the stock will list on 23rd March 2023 on the NSE and the BSE. This is the first mainboard IPO that has opened after the Adani Enterprises was withdrawn by the promoters, despite getting full subscription for their offering. Let us now turn to how to apply for the IPO of Global Surfaces Ltd.

Investors can apply either through their existing trading account or the ASBA application can be directly logged through the internet banking account. This can only be done through the authorized list of self-certified syndicate banks (SCSB). In an ASBA application, the requisite amount is only blocked at the time of application and the necessary amount is debited only on allotment. Investors can apply in the retail quote (up to Rs2 lakh per application) or in the HNI / NII quota (above Rs2 lakh).

Financial highlights of Global Surfaces Ltd

The table below captures the key financials of Global Surfaces Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

There are few key takeaways from the financials of Global Surfaces Ltd which can be enumerated as under

1. The growth of the company has been rather low. On an average, the compounded annual growth rate (CAGR) of revenues has been under 10%.
    

2. The PAT margins have sustained at above 17% in the last two years and that is rather encouraging. However, this is a business with traditionally high levels of competition from the unorganized sector in India.
    

3. While the return margins like NPM and RONW are healthy, the asset turnover could come under pressure as the fresh issue adds to this stress on the asset utilization efficiency.

Overall, financials are encouraging and we get a clearer picture of valuations only after the pricing of the IPO is decided. For now, the only area of concern in the IPO is the potential for competition from the unorganized sector, which is quite rampant in this business.