Global Surfaces Limited IPO

Apply 0
Avoid 0

i. Global Surfaces is engaged in the business of processing natural stones and manufacturing engineered quartz. Natural stones are produced by complex geological processes and include a number of products such as granite, limestone, marble, slate, quartzite, onyx, sandstone, travertine, and others that are quarried from the earth. Natural stones are widely known for their uniqueness, aesthetic appeal, texture, color, and composition as no two natural stones are the same. Engineered quartz on the other hand, is an example of engineered stone used in the countertop industry, which is a composite material made up of crushed stone bonded by an adhesive. For instance, for countertops, the slabs are made from quartz crystals bonded with a resin binder.

ii. Globally, the natural and engineered stone (combined) market accounted for $65,746 million in 2022 and is expected to reach of $ 114,504 million by 2032. In the year 2022, the natural stone segment accounted for a major 59% of market share with $ 38,829 million while the contribution of engineered stone segment stood at $ 26,917 million. However, in projected years between 2022 and 2027, the engineered stone is expected to grow at a higher CAGR of 6-7% as compared to natural stone which is expected to grow at a CAGR of 5-6%. This is mainly because the engineered stones are non-porous, strong, durable and stain resistant.

iii.  Global Surfaces have two units, one located at RIICO Industrial Area, Bagru Extn, Bagru, Jaipur, Rajasthan and the other at Mahindra World City SEZ, Jaipur, Rajasthan for processing and manufacturing of its products.

iv. Their products have application in the flooring, wall cladding, countertops, cut-to size and other items. Their products are used in both commercial and residential industry and are sold within and outside India. Majority of our operational revenues comprise of export sales.

Competitive Strengths

i. Consistent Growth
ii. Wide product portfolio and multiple designs
iii. Established presence in international markets
iv. Experienced and result oriented Promoter

 

 

Objects of the Global Surfaces Limited IPO:

The Company proposes to utilize the Net Proceeds towards the funding of the following objects: i. Investment in the wholly owned subsidiary, Global Surfaces FZE for part-financing its capital expenditure requirements in relation to the setting up of a manufacturing facility for engineered quartz at The Jebel Ali Free Zone, Dubai, United Arab Emirates (UAE); ii. General corporate purposes.  
DRHP of Global Surfaces Limited IPO
RHP of Global Surfaces Limited IPO

Global Surfaces Limited IPO Details:

Open Date: Mar 13 2023
Close Date: Mar 15 2023
Total Shares: 11,070,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 155 Cr.
Lot Size: 100 Shares
Issue Price: ₹ 133-140 Per Equity Share
Listing At: NSE,BSE
Listing Date: Mar 23 2023

Promoters And Management:

Mayank Shah is the Managing Director of the Company and has been associated with the Company since 2004. He has played an instrumental role in acquisition and revival of a sick industrial unit (Unit I) which eventually became the pillar of support of the Company’s operations. The Company was able to tap international markets though Mr. Shah’s vision and resources. The Company was able to diversify its business into manufacturing of engineered quartz under Mr. Shah’s tutelage. Mr. Shah holds a Bachelors’ degree in Commerce (1999) from University of Calcutta and has about 18 years’ experience in the natural and engineered stone industry. He looks after various aspects of the Company’s business including planning, procurement, finance, monitoring and execution and engineered stone industry. He looks after various aspects of the Company’s business including planning, procurement, finance, monitoring and execution. Sweta Shah is the Executive Director of the Company. She holds a Bachelors’ degree in Commerce (1997) from the University of Calcutta. She has an experience of approximately 2 years working as a Chief Executive Officer in the Company and has been associated with the Company since September 11, 2021. She looks after Administration & Marketing of the Company. Ashish Kumar Kachawa is the Non-Executive Director of the Company. He holds a Bachelors’ degree in Commerce (2001) from University of Jodhpur. He has worked as a Business Consultant in the past and has subsequently worked as a Marketing Manager in Basecase General Trading LLC, Dubai, UAE. Later, Mr. Kachawa joined Tyche Advisory Corporate Services LLC, Dubai, UAE as a its Research Studies Manager. He is associated with Global Surfaces FZE as a Director.  

Financials of Global Surfaces Limited IPO:

Particulars (in millions) Mar-20 Mar-21 Mar-22
Sales ₹1,632 ₹1,753 ₹1,903
Sales Growth 0.00% 7.40% 8.52%
COGS ₹710 ₹719 ₹866
COGS % of Sales 43.49% 41.00% 45.55%
Gross Profit ₹922 ₹1,034 ₹1,036
Gross Margins 56.51% 59.00% 54.45%
Employee Benefit & Other Expenses
 ₹517 ₹561 ₹618
S&G Sales % 31.70% 32.01% 32.49%
EBITDA ₹404 ₹473 ₹418
EBITDA Margins 24.80% 26.98% 21.97%
Interest Cost ₹52 ₹34 ₹29
Interest %of Sales 3.20% 1.94% 1.56%
Depreciation ₹168 ₹130 ₹107
Dep %of Sales 10.33% 7.42% 5.66%
EBIT Margins 14.47% 19.56% 16.30%
Other Income 24 36 80
Earnings Before Tax ₹209 ₹345 ₹361
EBT % Sales 12.80% 19.69% 18.97%
Tax -₹2.43 ₹5.98 ₹4.72
PAT ₹211 ₹339 ₹356
NPM 12.95% 19.35% 18.72%
No. of Equity Shares 6.45 6.45 33.862
Earning Per Share ₹32.78 ₹52.61 ₹10.52

Comparison With Peers:

The nearest peer is the Pokran Limited. The same is available at P/E of 12x.  

Recommendation on Global Surfaces Limited IPO:

Review and Recommendation of Global Surfaces IPO by IZ team is 3/10 1. The company is engaged in the business of processing of natural stones and manufacturing of engineered quartz. 2. These products have application in the flooring, wall cladding, countertops, cut-to size and other items. 3. At present company’s ~100% revenue comes from export and 99% of that comes from US markets. Any problem in the US market will affect the business significantly. 4. They manufacture the above products from two factories in the region of Rajasthan. 5. The funds from the IPO proceeds will be used for setting up new plant in UAE. 6. Sales have grown from 163 Crores in Fy20 to 190 Crores in Fy22. The growth is around 8% which is not very good. 7. Gross Margins and EBITDA margins both have come down in the last 3 years. Same fall is observed in the peer of the company i.e. Pokarna Limited. That means some issue in the sector itself. 8. Mcap = 600 Cr, Sales = 190 Cr, P/E = 16x, while peer Pokarna, Mcap = 933 Cr, Sales = 650 Cr, P/E = 12x. So, as compared to peer this looks overpriced IPO. 

 

Lead Manager of Global Surfaces Limited IPO:

  1. Unistone Capital Pvt Ltd

Registrar of Global Surfaces Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Global Surfaces Limited Plot No. PA-10-006, Engineering and Related Industries SEZ, Mahindra World City, Sanganer Jaipur – 302 037 Phone: 0141-7191000 Email: info@globalsurfaces.in Website: http://www.globalsurfaces.in/  

Discussion on Global Surfaces Limited IPO:

1 Comment

Leave a Reply