Gala Precision Engineering IPO Sees Massive Demand: Check Subscription Status, Grey Market Premium, and Should You Invest?

The initial public offering (IPO) for Gala Precision Engineering began on Monday, September 2, and is set to close today, Wednesday, September 4. The IPO has seen strong interest, particularly from non-institutional investors, followed by retail investors. On the second day, even Qualified Institutional Buyers (QIBs) joined in with significant demand, and employees showed high interest as well.

High Demand on Day 2

By the end of the second day, the Gala Precision Engineering IPO was subscribed 52.21 times overall, according to data from the Bombay Stock Exchange (BSE). Non-institutional investors led with a 132.93 times subscription, while retail investors subscribed 44.21 times their allotted shares. QIBs subscribed 5.06 times their portion, and the employee quota was filled 117.89 times. On the first day, the IPO had already been subscribed 10.84 times.

Price Range and Investment Details

The IPO is priced between ₹503 and ₹529 per share, with a face value of ₹10. Gala Precision Engineering manufactures specialized springs and fastening solutions and has secured an investment of ₹50.29 crores from anchor investors. The lot size for the IPO is 28 shares, with investors able to purchase additional lots in multiples of 28.

The company has reserved no more than 50% of the shares for QIBs, at least 15% for non-institutional investors, and at least 35% for retail investors.

Company Financials

Gala Precision Engineering generated ₹202.54 crores in revenue for the fiscal year 2023-2024, with a net profit of ₹22.33 crores.

Brokerage Reviews

• Master Capital Services Ltd: The company has positioned itself to take advantage of both domestic and international markets. It is focused on moving up the value chain and enhancing its core competencies in precision engineering. Investors are advised to consider medium- to long-term investments in the IPO.
• Indsec Securities: The company holds a 10% market share in the Indian disc market and a 2% share in the global DSS and WLW markets. It plans to expand its facilities in Tamil Nadu and increase its production capacity. The DSS and WLW industries are expected to grow at a 6.4% CAGR from FY24 to FY27, driven by government initiatives in infrastructure and renewable energy. The IPO is rated as a “SUBSCRIBE” due to its strong financials, industry potential, and debt reduction plans.

IPO Structure and Use of Funds

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 crores, with ₹134.34 crores from the fresh issue and ₹32.58 crores from the OFS.

The company plans to use the proceeds to build a new facility in Tamil Nadu, purchase machinery and equipment for its Maharashtra plant, repay some of its debt, and cover general corporate expenses.

Grey Market Premium (GMP)

As of today, the grey market premium (GMP) for Gala Precision Engineering’s IPO is +₹230, indicating that the shares are trading at a ₹230 premium over the issue price in the grey market. This suggests a potential listing price of ₹759 per share, which is 43.48% higher than the upper IPO price of ₹529. The GMP has been trending upward, suggesting a strong listing is expected.

Conclusion

Investors have shown strong interest in the Gala Precision Engineering IPO, with high subscriptions from all categories. The company’s solid financials, strategic market position, and positive grey market trends make it a compelling investment opportunity.