Gala Precision IPO subscribed 133 times on Day 3 so far; NIIs quota booked 328x

The initial public offering (IPO) of Gala Precision Engineering continued to attract a bumper response from investors during the third and final day of the bidding process. The issue was subscribed nearly 11 times on day one and was booked more than 52 times on day 2.
 

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 29,53,79,644 equity shares, or 132.82 times, compared to the 22,23,830 equity shares offered for the subscription by 2 pm on Wednesday, September 04. The three-day bidding for the issue, which opened on Monday, September 02, concludes today.
 

The allocation for non-institutional investors (NIIs) was subscribed 327.53 times, while the portion reserved for retail investors saw a subscription of 76.52 times. Employee portion was booked about 220.97 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was subscribed 79.27 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 remained stable amid the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 230 per share in the unofficial market, suggesting a listing pop of around 44 per cent for the investors.
 

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.
 

Increased demand in automotive and industrial sectors is expected to support Gala Precision’s product offerings. Consistent revenue and profit growth, alongside expanding margins, demonstrate financial stability and operational efficiency. Strong financial performance, strategic expansion, robust export growth, and reasonable valuation make it attractive, said Canara Bank Securities.
 

"The company operates in a market with high entry barriers, including long supplier qualification periods of 12-24 months. Strong international presence provides a hedge against domestic market fluctuations and opportunities for growth. The IPO is priced at a P/E ratio of 21.71 times, which is attractive compared to peers," it added with a 'subscribe' rating.
 

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 is a one of the major precision engineering manufacturers that specializes in DSS & WLW and CSS. It enjoys 2 per cent market share in the global DSS & WLW and 10 per cent market share in the Indian Disc Market. The company is going to set up a new capacity in Tamil Nadu and expand the capacity of DSS & WLW in its existing facilities, said Indsec Research.
 

"The company since inception has followed a strategy to move to products that have a high TAM, this has helped the company to consistently grow. Therefore, expansion in SFS, robust financial track record, debt reduction and positive industry factors make this IPO an attractive proposition. We thus issue 'subscribe' rating on the issue," it added.
 

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