Gala Precision Engineering IPO booked 10.84x on day 1 so far. Know GMP, subscription status. Apply or not?

The subscription for the Gala Precision Engineering IPO will open today, Monday, September 2, and will close on Wednesday, September 4. The price range for the Gala Precision Engineering Limited IPO has been set at ₹503 to ₹529 per capital share of nominal value ₹10. Lead investors contributed ₹50.29 crores for Gala Precision Engineering, a manufacturer of precision specialty spring components such as Disc and Strip Springs (DSS), Coil and Spiral Springs (CSS) and Special Fastening Solutions (SFS). The lot size for Gala Precision Engineering IPO is 28 equity shares and further shares can be purchased in multiples of 28.

Gala Precision Engineering IPO has reserved not more than 50% of the shares in the public issue for qualified institutional buyers (QIB), not less than 15% for non-institutional institutional investors (NII) and not less than 35% of the offer has been reserved for retail investors.

The company supplies its products to original equipment manufacturers (OEMs), Tier 1s, and channel partners. These products are used in industries such as general engineering, off-road equipment, electrical, and transportation, as well as mobility segments such as automotive and rail. Renewable energy includes wind turbines and hydroelectric power.

The company has a diverse clientele of over 175 active customers worldwide, including renewable energy customers such as Vestas Wind Technology India Pvt Ltd, Enrecon GmbH, GE India Industrial Pvt Ltd, Altra Industrial Motion India Pvt Ltd and others. It also serves industrial customers such as L&T Electrical & Automation Products (a unit of Schneider Electric Pvt. Ltd.), Schneider Electric India Pvt. Ltd., Wuerth Industrial Services India Pvt. Ltd., Bufab India Pvt. Ltd., and automotive customers such as Schaeffler India Ltd., Brembo Brake India Pvt. Ltd., Hitachi Astemo Chennai Pvt. Ltd., Exedy Clutch India Pvt. Ltd., Endurance Technologies Ltd. The company also serves the rail industry, providing services to Faiveley Transport Rail Technologies India Pvt. Ltd. (a Wabtec company).

In the 2023–2024 financial year, the company’s operating revenue amounted to ₹202.54 crore, while the profit after tax stood at ₹22.33 billion rupees.

Gala Precision Engineering IPO Subscription Status

The initial public offering of shares of Gala Precision Engineering IPO was subscribed 10.84 times on the first day of subscription, as per BSE data, as at 17:03 IST.

As per BSE data, in the primary share sale, bids were received for 2,41,14,972 shares as against 22,23,830 shares on offer.

The retail investor portion received 12.17 times subscription, while the non-institutional investor portion was subscribed 20.72 times. The qualified institutional buyers (QIB) portion is 86% reserved and the employee portion was subscribed 38.33 times.

Gala Precision Engineering IPO Review

Choice Capital Brokerage Pvt Ltd

According to the broker, the company is engaged in the production of specialized, precision components that are essential for end-user applications. The broker expects continued growth in demand from end-user industries such as renewable energy, industrial, and railways for its products. Hence, they rate the issue as ‘SUBSCRIBE’ given its dominant market position, global Tier-1 clientele, and high requested valuation.

“At the higher end of the price spectrum, the company is asking for an EV/Sales multiple of 2.9x, which is a discount to the peer average of 4.7x. Hence, the issue is attractively priced,” the broker said.

Swastika Investmart Ltd

According to the broker’s assessment, the company has shown solid and steady revenue growth. While profitability has experienced minor fluctuations, the overall financial performance is still positive. The IPO valuation is in line with industry norms.

From an investor’s perspective, the brokerage report indicates that, given current market trends and the growing demand for precision components, the company is strategically positioned for a successful initial public offering and further growth.

Gala Precision Engineering IPO Details

Fresh issue of 2.56 million shares and Offer for Sale (OFS) of 616,000 shares by existing promoters and shareholders are part of Initial Public Offering (IPO). Total issue size at the upper end of the price band is ₹167.93 crore, with the fresh issue priced at ₹134.34 crore and OFS on ₹32.58 crores.

The Company intends to use the net proceeds for the following purposes: setting up of a new plant at Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu for the production of hexagon bolts and high tensile fasteners; to fund capital expenditure required for purchase of machinery, plant and equipment at Wada, Palghar, Maharashtra; repayment or prepayment of part of the company’s borrowed funds, in whole or in part; and general corporate purposes.

The IPO registrar for Gala Precision Engineering is Link Intime India Private Ltd and the lead bookrunner is Pl Capital Markets Private Limited.

Precision Engineering IPO GMP Gala Today

The market price of Gala Precision Engineering IPO is + ₹240. This means that the Gala Precision Engineering share price was trading at a premium ₹240 on the grey market, according to investorgain.com

Taking into account the upper end of the IPO price range and the current premium on the grey market, the estimated issue price of Gala Precision Engineering shares was ₹769 per share, which is 45.37% higher than the IPO price ₹529.

The “grey market premium” indicates investors’ willingness to pay more than the issue price.

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