Gala Precision Engineering Limited IPO

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Gala Precision Engineering Limited is a leading precision component manufacturer specializing in technical springs and fastening solutions. Their product offerings include disc and strip springs (DSS), such as wedge lock washers, coil and spiral springs (CSS), and special fastening solutions (SFS). These components are essential for original equipment manufacturers (OEMs), Tier 1 suppliers, and channel partners across various industries, including renewable energy (wind turbines and hydro power plants), industrial sectors (electrical, off-highway equipment, infrastructure, general engineering), and mobility segments (automotive and railways).

Product Divisions and Market Presence

Their business operates primarily through two divisions:
i. Springs Technology Division: We manufacture DSS, including wedge lock washers (WLW), and CSS.
ii. Special Fastening Solutions (SFS): We produce anchor bolts, studs, and nuts.

Their DSS products are widely used in renewable energy, railways, automobiles, heavy machinery, and electrical power equipment. The global DSS and WLW market was valued at approximately USD 891 million in 2023, growing at a CAGR of around 6% from 2020 to 2023. They hold a global market share of approximately 2% in this segment and a significant 10% share in the Indian disc springs market. Specifically, they dominate the domestic market for disc springs in the renewable energy sector, holding a 70% share, and a 3% share globally.

Global Reach and Competition

They have established a strong global presence, supplying their technical springs and high-tensile fasteners to customers in countries such as Germany, Denmark, China, Italy, Brazil, the USA, Sweden, and Switzerland. This positions us as a key link in the global supply chain for OEMs.

In the global market, they mainly compete with companies like Muhr und Bender KG, Schnorr GmbH, and Christian Bauer GmbH + Co. KG. In the Indian market, their primary competitor in the disc springs segment is International Industrial Springs.

Industry Position

Their listed competitors include notable companies like Harsha Engineers International Limited, SKF India Limited, Sundram Fasteners Limited, Rolex Rings Limited, Sterling Tools Limited, and Ratnaveer Precision Engineering Limited. Despite intense competition, their focus on quality, innovation, and customer satisfaction has helped them secure a strong foothold in both domestic and international markets.

Objects of the Gala Precision Engineering Limited IPO:

The company proposes to utilise the Net Proceeds towards funding the following objects: i. Setting up a new facility at Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu for manufacturing high tensile fasteners and hex bolts; ii. Funding capital expenditure requirements towards purchase of equipment, plant and machinery at Wada, Palghar, Maharashtra; iii. Repayment/ prepayment, in full or part, of certain borrowings availed by the company; and iv. General corporate purposes. Total number of share issues :- i. Fresh issue is 2,558,416 shares, ii. Offer for sale is 616,000 shares.
DRHP of Gala Precision Engineering Limited IPO
RHP of Gala Precision Engineering Limited IPO

Gala Precision Engineering Limited IPO Details:

Open Date: Sep 02 2024
Close Date: Sep 04 2024
Total Shares: 3,174,416
Face Value: ₹ 10 Per Equity Share
Issue Size: 167.93 Cr.
Lot Size: 28 Shares
Issue Price: ₹ 503 - 529 Per Equity Share
Listing At: NSE,BSE
Listing Date: Sep 09 2024

Promoters And Management:

Kirit Vishanji Gala is the Chairman and Managing Director of the company, serving as Managing Director since its inception. He holds a bachelor’s degree in mechanical engineering and a master’s in management studies from the University of Bombay. He has also completed a course at IMD, Switzerland, and received the Pride of Welingkar Institute of Management award in 2023. Kirit oversees business strategies and marketing. Previously, he was the promoter and Managing Director of Gala Precision Technology Limited, which was acquired by Hoerbiger Deutschland Holding GmbH in 2009. Balkishan Jalan is the Executive Director of the company and has been with them since its inception. He holds a bachelor’s degree in commerce from the University of Bombay and is a qualified chartered accountant. With 25 years of experience in operations, he oversees operations, finance, and overall management. Previously, he served as the Chief Operating Officer at Gala Precision Technology Private Limited, where he was also associated with Gala Equipments Limited. He is a recipient of the SAP ACE Excellence Award (2010). Satish Kotwani, the Whole-Time Director of the company, brings 30 years of marketing experience. He holds diplomas in mechanical engineering, materials management, and marketing management, along with executive education from IIM Bangalore and ISB. Since joining them at inception via the BTA, he has played a key role. Previously, he worked at Born Marketers Private Limited and later served as a senior manager in business development at Gala Precision Technology Private Limited. Satish now oversees global business development, marketing, and sales.

Financials of Gala Precision Engineering Limited IPO:

Particulars ( In Crores )
2022
2023
2024
Revenue from Operations 145 165 203
Other Income 3 2 2
Total Revenue 148 167 204
Cost of material consumed 60 71 90
Change in Inventories -1 -5 -7
Employees Benefit Expenses 22 23 25
Other Expenses 45 48 56
EBITDA 22 29 41
OPM (%) 15.11% 17.32% 19.86%
Depreciation & Amortisation 6 6 7
EBIT 16 23 34
Finance Cost 5 5 6
PBT 11 27 25
Tax 5 3 3
PAT 7 24 22
NPM (%) 4.48% 14.49% 10.93%
No.of Shares 1.26 1.26 1.26
EPS 5.23 19.10 17.62

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Gala Precision Engineering Limited 203 22 17.62 30.0 529 670
Harsha Engineers International Limited 1,081 127 13.94 35.3 525 4,783
SKF India Limited 4,570 552 111.61 46.6 5,244 25,924
Sundram Fasteners Limited 5,666 526 24.83 53.0 1,351 28,390
Rolex Rings Limited 1,222 156 57.30 38.0 2,450 6,671
Sterling Tools Limited 932 55 15.37 29.6 496 1,785
Ratnaveer Precision Engineering Limited 595 31 6.40 23.5 171 829
* All the data is as per FY24.

Recommendation on Gala Precision Engineering Limited IPO:

1. Gala Precision Engineering Limited is a precision component manufacturer specializing in the production of technical springs and special fastening solutions, primarily catering to original equipment manufacturers (OEMs), Tier 1 suppliers, and channel partners. 2. Their products are essential components across a variety of sectors, including renewable energy, industrial applications, and mobility segments like automotive and railways. 3. Product Portfolio: i. Disc & Strip Springs (DSS) ii. Coil & Spiral Springs (CSS) iii. Special Fastening Solutions (SFS) 4. Global Reach: Their products are supplied to customers across various international markets, including Germany, Denmark, China, Italy, Brazil, the USA, Sweden, and Switzerland. This global footprint makes them a crucial link in the international supply chain for OEMs, particularly in high-growth sectors like renewable energy and mobility. 5. Competitive Landscape: They operate in a highly competitive environment where they face competition from both global and domestic players. Their competitors vary depending on the product category and geography. In the DSS market, they compete with global leaders such as Muhr und Bender KG, Schnorr GmbH, and Christian Bauer GmbH + Co. KG. Domestically, they face competition from International Industrial Springs. In the CSS segment, our main competitors include Stumpp Schuele & Somappa Springs Private Limited and NHK Springs India Limited, among others. In the SFS market, we compete with global companies like Cooper & Turner Limited, Rose Holm A/S, and August Friedberg GmbH, as well as Indian companies like Randack Fasteners India Private Limited. 6. The Revenue has Increased from Rs.145 Crores in FY22 to Rs.203 Crores in FY24. 7. The EBITDA has Increased from 22 Crores in FY22 to 41 Crores in FY24. 8. The PAT has Increased from 7 Crores in FY22 to 22 Crores in FY24. 9. As per FY24, CFO/EBITDA is 0.98, and EPS is 17.62, 10. Market Capitalization is 670 Crores and P/E is 30.0x based on FY24.

Lead Manager of Gala Precision Engineering Limited IPO:

  1. PL Capital Markets Private Limited

Registrar of Gala Precision Engineering Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Gala Precision Engineering Limited A-801, 8th Floor Thane One DIL Complex, Ghodbunder Road Majiwade, Thane (West)-400610 Phone: +91 22-6930 9224 Email: investor.relations@galagroup.com Website: https://www.galagroup.com/

Discussion on Gala Precision Engineering Limited IPO:

1 Comment

    Aplied and got no allotment. Bought some on listing. Like to hold for long term.

    Reply

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