Gala Precision Engineering IPO Kicks Off: GMP, Subscription Status, and Expert Reviews—Should You Apply?

Gala Precision Engineering’s IPO opened for subscription today, Monday, September 2, and will close on Wednesday, September 4. The IPO price range is set between ₹503 and ₹529 per share, with a face value of ₹10. Anchor investors have already contributed ₹50.29 crore to this precision component manufacturer, known for producing specialized springs like disc and strip springs (DSS), coil and spiral springs (CSS), and special fastening solutions (SFS). The minimum lot size for this IPO is 28 shares, and additional shares can be bought in multiples of 28.

The company has allocated up to 50% of the shares for qualified institutional buyers (QIBs), at least 15% for non-institutional investors (NIIs), and 35% for retail investors.

About Gala Precision Engineering

Gala Precision Engineering supplies its products to original equipment manufacturers (OEMs), Tier 1 suppliers, and channel partners. Their products are used in industries like general engineering, off-highway equipment, electrical, and transportation, as well as in mobility sectors such as automotive and railways. They also serve the renewable energy sector, including wind turbines and hydropower plants.

The company has a broad customer base with over 175 active global clients, including well-known names like Vestas Wind Technology India Pvt Ltd, GE India Industrial Pvt Ltd, and L&T Electrical & Automation Products (part of Schneider Electric Pvt. Ltd.). Their clients span across industries, including automotive, industrial, and railways.

In the fiscal year 2023-2024, Gala Precision Engineering reported an operating revenue of ₹202.54 crore and a profit after tax of ₹22.33 crore.

IPO Subscription Status and Review

The public issue opened for subscription today at 10:00 AM.

Brokerage Reviews

Choice Equity Broking Pvt Ltd rates the IPO as “SUBSCRIBE.” The brokerage believes the company’s specialized precision components are crucial for their clients’ applications and expects rising demand from sectors like renewable energy, industrials, and railroads. They note that at the higher price band, the company is asking for an EV/Sales multiple of 2.9x, which is below the peer average of 4.7x, making the IPO attractively priced.

Swastika Investmart Ltd also offers a positive review, highlighting the company’s steady revenue growth despite minor fluctuations in profitability. The brokerage suggests that the company is well-positioned for success given current market conditions and the increasing demand for precision components.

IPO Details

The IPO includes a fresh issue of 2.56 million shares and an offer for sale (OFS) of 616,000 shares by existing promoters and shareholders. The total issue size, at the upper price band, is ₹167.93 crore, with ₹134.34 crore coming from the fresh issue and ₹32.58 crore from the OFS.

The proceeds from the IPO will be used for various purposes, including establishing a new facility in Tamil Nadu for manufacturing hex bolts and high tensile fasteners, financing capital expenditures for machinery and equipment in Maharashtra, repaying or prepaying some of the company’s debt, and for general corporate purposes.

Link Intime India Private Ltd is the registrar for the IPO, and Pl Capital Markets Private Limited is the lead manager.

Gala Precision Engineering IPO GMP

The grey market price (GMP) for Gala Precision Engineering’s IPO is currently at a premium of ₹240. This suggests that the shares could list at around ₹769 each, which is 45.37% higher than the upper IPO price of ₹529. The grey market premium reflects investors’ willingness to pay more than the issue price.