Global Surfaces Limited IPO
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.
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:
Global Surfaces Limited IPO Details:
|Open Date:||Mar 13 2023|
|Close Date:||Mar 15 2023|
|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 Date:||Mar 23 2023|
Promoters And Management:
Financials of Global Surfaces Limited IPO:
|Particulars (in millions)||Mar-20||Mar-21||Mar-22|
|COGS % of Sales||43.49%||41.00%||45.55%|
Employee Benefit & Other Expenses
|S&G Sales %||31.70%||32.01%||32.49%|
|Interest %of Sales||3.20%||1.94%||1.56%|
|Dep %of Sales||10.33%||7.42%||5.66%|
|Earnings Before Tax||₹209||₹345||₹361|
|EBT % Sales||12.80%||19.69%||18.97%|
|No. of Equity Shares||6.45||6.45||33.862|
|Earning Per Share||₹32.78||₹52.61||₹10.52|
Comparison With Peers:
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.