 |
|
The initial public offering (IPO) of Gala Precision Engineering has witnessed significant investor interest, particularly on the second day of bidding. The IPO, seeking to raise Rs 167.93 crore, garnered a remarkable 52.36 times subscription, indicating strong demand for the company's shares. This translates to bids for 11,64,29,880 shares, exceeding the 22,23,830 shares on offer.
The category for non-institutional investors saw the highest demand, receiving 133.04 times subscription, while Retail Individual Investors (RIIs) contributed 44.45 times subscription. The qualified institutional buyers (QIB) category, however, received a relatively modest 5.06 times subscription. These figures suggest a strong appetite from retail and non-institutional investors.
The IPO is expected to close on September 4th, with the price band fixed between Rs 503 to Rs 529 per share. Given the overwhelming demand, investors are keenly anticipating the listing price. According to market observers, the grey market premium (GMP) for Gala Precision Engineering is currently trading at Rs 230 above the issue price. This indicates that the market is anticipating a substantial listing gain, with a potential 43.48 percent return.
The grey market premium reflects investor sentiment and readiness to pay a price above the IPO price. This is largely driven by the company's perceived growth potential and the strong response to the IPO.
A number of brokerage firms have recommended subscribing to the Gala Precision Engineering IPO, citing a 'fairly valued' price-to-earnings (PE) ratio and promising growth prospects. BP Equities, in its IPO note, highlighted that at the upper price band, the issue is valued at a PE of 24.3x based on FY24 earnings, which they believe is reasonable compared to comparable listed companies. Choice Broking echoed this sentiment, also recommending a 'subscribe' rating.
Choice Broking's analysis points to a forecasted 23.3% compound annual growth rate (CAGR) in revenue over FY24-26E, reaching Rs. 307.7 crore. They anticipate a sustained EBITDA margin at FY24 levels and an increase in adjusted PAT by 22.8% CAGR to Rs. 37.2 crore in FY26E. These positive projections further strengthen the case for subscribing to the IPO.
Gala Precision Engineering's financial performance demonstrates a positive trend, with increased operating cash flows and a decreasing debt-to-equity ratio. This indicates a sound financial position and supports the company's growth strategy. The company's focus on high-demand products, such as technical springs and special fastening solutions, used in sectors like renewable energy, industrial machinery, and automotive, presents attractive growth opportunities.
The IPO comprises a fresh issue of 25.58 lakh equity shares worth Rs 135.34 crore and an offer-for-sale (OFS) of 6.16 lakh equity shares valued at Rs 32.58 crore by promoter group entities and individual shareholders. The proceeds from the fresh issue will be used for expanding production capacity, purchasing equipment, repaying debt, and general corporate purposes.
Gala Precision Engineering, a prominent precision component manufacturer, supplies its products to OEMs, Tier 1 suppliers, and channel partners across diverse sectors. Their expertise in technical springs, including disc & strip springs, coil & spiral springs, and special fastening solutions, positions them strategically to benefit from ongoing industry growth.
Source: Gala Precision IPO Receives 52.36x Subscription on Day 2, Check GMP Today