Gala Precision IPO subscribed 41 times on Day 2 so far; NIIs & employee portions nearing 100x mark

The initial public offering (IPO) of Gala Precision Engineering continued to attract a bumper robust from the investors during the second of the bidding process. The issue, which had kicked off on Monday, September 02, was subscribed nearly 11 times on day one.
 

The Gala Precision Engineering is selling its shares in the price band of Rs 503-529 apiece. Investors can apply for a minimum of 28 shares and its multiples thereafter. It is looking to raise Rs 167.93 crore via IPO, which includes a fresh share sale of Rs 135.34 crore, and an offer-for-sale (OFS) of up to 6.16  lakh equity shares.
 

According to the data, the investors made bids for 9,15,19,904 equity shares, or 41.15 times, compared to the 22,23,830 equity shares offered for the subscription by 3.15 pm on Tuesday, September 03. The three-day bidding for the issue will conclude on Wednesday, September 04.
 

The allocation for non-institutional investors (NIIs) was subscribed 98.06 times, while the portion reserved for retail investors saw a subscription of 98.06 times. Employee portion was booked about 97.69 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was subscribed 4.62 times as of the same time.
 

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

The grey market premium of Gala Precision Engineering has seen a decent rise amid the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 265-270 per share in the unofficial market, suggesting a listing pop of over 50 per cent for the investors. However, the premium in the grey market stood around Rs 240 on the first day of the bidding.
 

Brokerages are mostly positive on the issue, suggesting investors to subscribe to it for a long-term citing its strong market share, long term relationship with customers, experienced management and solid track record. However, lack of exclusivity agreements, ongoing litigation and dependence on select customers may dent its prospects.
 

Gala Precision Engineering is poised to leverage its strong foothold in the precision components industry amidst a favorable market environment marked by robust growth in the renewable energy and automotive sectors. The company has demonstrated impressive financial performance, stable gross profit margins, said DR Choksey FinServ.
 

"The expansion of its manufacturing facilities and the introduction of new products will enable the company to capture additional market share in both domestic and international markets. It is valued at P/E of 30 times which is trading at a discount compared to its peers. Given the favourable industry trends, its strategic advantages and we assign a Subscribe rating to the IPO," it said.
 

Gala Precision reported a net profit of Rs 22.33 crore with a revenue of Rs 204.38 crore for the financial year ended on March 31, 2024. The company's net profit came in at Rs 24.21 crore with a revenue of Rs 167.08 crore for the financial year 2022-23. Gala Precision Engineering will command a total market capitalisation of Rs 670.24 crore.
 

Gala Precision Engineering raised Rs 50.3 crore from 8 anchor investors. Gala Precision has reserved 50 per cent of its net offer for the qualified institutional bidders (QIBs), while 15 per cent of the offering is allocated towards the non-institutional investors (NIIs). Remaining 15 per cent shares will be allocated to the retail investors for the issue.
 

Gala Precision has positioned itself to take advantage of these trends and has developed a notable market share in both its segment, both domestic and global. It is focusing on strengthening its core capabilities in precision engineering for increased sustainability, said Master Capital Services.
 

"The company is also moving up their operations up the value chain from niche markets to large addressable markets. It also plans to leverage in-house design and development capabilities to grow its product offerings and capitalize on future trends. Investors looking to invest can invest in the IPO for the medium to long term," it said.
 

PL Capital Markets is the sole book running lead manager of the Gala Precision Engineering IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE, with September 9, Monday as the tentative date of listing at the bourses.