Gala Precision Engineering IPO : Many investors are focusing on the forthcoming IPO of Gala Precision Engineering Limited. Headquartered in Maharashtra, the company manufactures precision components. It is all set to open its IPO for subscription on Monday, September 2, 2024. The Offer represents a rare opportunity to invest in a company at the heart of the global supply chain, especially for Electrical, Off-highway Equipment, Infrastructure, General Engineering, Automotive, and Railway industries. Let’s go into some key details about this IPO.
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About Gala Precision Engineering IPO
Gala Precision Engineering Ltd is among the leading manufacturers of precision components, disc and strip springs, coil and spiral springs, and special fastening solutions amongst OEMs across various industries. The company’s presence extends beyond India as it supplies technical springs and high-tensile fasteners to customers in countries like Germany, Denmark, China, Italy, Brazil, the USA, Sweden, and Switzerland. All this stretched-out international presence bolsters Gala Precision’s status in the international OEM supply chain.
Details of the IPO
The Gala Precision Engineering IPO consists of a fresh issue of equity shares and an offer for sale by existing shareholders. Here’s everything investors could want to know about it:
Key Dates
The issue will open for subscription during a three-day window starting Monday, September 2, 2024, and will close on Wednesday, September 4, 2024. All this opens up in a small window of participation in the offering.
Price Band
Accordingly, the IPO price band has been fixed at ₹503-529 for every equity share of face value of ₹10 each. The final price within this band will be determined based on investor demand during the subscription period.
Issue Size
The IPO consists of a fresh issue of up to 25,58,416 equity shares and an offer-for-sale up to 6,16,000 equity shares by the promoter group and individual selling shareholders. The issue is bound to generate approximately ₹167.93 crore at the higher price band.
Offer-For-Sale Break-up
The OFS segment allows the existing shareholders to divest their stake. The main selling shareholder is Vishanji Harshi Gala, one of the promoters of the company, will offload up to 3,85,200 equity shares. Besides, other shareholders including Kirit Vishanji Gala (HUF), Nayna Gala, Satish Kotwani, Hemlata Dhiraj Shah, Dhiraj Nanchand Shah, Urmil Dhiraj Shah and Rupa Sunil Mehta will sell up to an aggregate of 2,30,800 equity shares, collectively.
Promoter Shareholding
Accordingly, the promoters’ stake in Gala Precision Engineering stands at 74.56 percent at present, which will be diluted by the IPO, essentially through the OFS part of the IPO, to make more public participation in the company’s equity.
Objectives of the IPO
The net proceeds from the fresh issue are proposed to be utilized by Gala Precision Engineering for funding the following purposes :
New Tamil Nadu Facility: The company proposes a new facility at Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu. The facility will manufacture hex bolts and high-tensile fasteners. The demand is on the rise due to the requirements of major industries.
Capital Expenditure: Part of the proceeds would be utilised towards financing the capital expenditure for acquisition of machinery, plants and equipments at its Wada, Palghar, Maharashtra unit. This would help improve production capabilities at Gala Precision.
Debt Repayment: The company intends to repay or prepay, in full or part, some of its exiting borrowings in order to augment its consolidated balance sheet, thereby helping it save on interest costs.
General Corporate Purpose: The balance would be used to meet general corporate purposes, including potential investments in technology, infrastructure, and other growth plans.
Details of Reservation and Allotment
Investor Reservation
The public issue of the IPO has a structured reservation for various categories of investors:
Qualified Institutional Buyers (QIBs): A maximum of 50% of the shares in the public issue are reserved for QIBs. This category relates to mutual funds, foreign institutional investors, and other large financial institutions.
Non-Institutional Investors: At least 15% of the shares are reserved for NIIs. Typically, this category includes HNIs and corporate entities. Retail Investors: The minimum reservation for retail investors is at least 35% of the offer. Normally, participation in this category is made of individual investors. Lot Size and Investment Threshold
Investors can bid for a minimum of 28 equity shares and in lots of 28 shares thereafter. The floor price of the shares is 50.3 times the face value while the cap price is 52.9 times the face value.
Key Allotment and Listing Dates
Allotment Date: Basis of allotment for the IPO to be finalized on Thursday, September 5, 2024.
Refunds and Allotment Credit: Refunds pertaining to unallotted shares would begin on Friday, September 6, 2024. Concurrently, the shares would be credited to the demat accounts of allottees.
Listing Date: Shares of Gala Precision Engineering are tentatively going to get listed on BSE and NSE on Monday, September 9, 2024.
Key Players Involved in IPO Process
The Book-Running Lead Manager: The book-running lead manager to the issue is PL Capital Markets Private Limited. Their key responsibilities will revolve around the new share issue and ensuring due compliance with the SEBI issues of capital and disclosure requirements, as applicable.
Registrar: The company has appointed Link Intime India Private Ltd as the registrar for the issue. It will perform the processing of the application and other related activities, including dealing with the share allotment and refunds.
Anchor Investors and Fundraising
gala precision engineering Ahead of the subscription period opening for the IPO, anchor investors subscribed to Gala Precision Engineering. The company raised ₹ 50.29 crore by allocating 9,50,586 equity shares at ₹ 529 a piece to anchor investors comprising foreign as well as domestic institutions including NAV Capital Emerging Star Fund and Negen Undiscovered Value Fund.
Gala Precision Engineering IPO Grey Market Premium (GMP)
At the latest updates, the grey market premium for Gala Precision Engineering IPO stood at ₹240. This means that shares of the company changed hands at a premium of ₹240 in the unofficial grey market, reflecting strong interest amongst investors. With the upper end of the IPO price band factoring in the current GMP, shares of Gala Precision Engineering are likely to list around ₹760 apiece. This would imply a premium of 45.37% above the issue price of ₹529.
Conclusion
Investors through the Gala Precision Engineering IPO would get an opportunity to invest in a well-established company with a strong foothold in the precision components manufacturing industry. With a well-charted growth strategy, a strong international presence, and high demand across various industries, Gala Precision promises to be a fruitful venture in the long run. Investors will have to carefully look at the details of the IPO on offer, like company goals and financial soundness, and market prospectus for the shares offered. As with any IPO, in-depth research and consultation with a financial advisor are essential before making relevant and calculated investment decisions.