Gala Precision Engineering IPO: The good and the bad

Published: 31st Aug 2024

By: Value Research

About Gala Precision Engineering

The company manufactures highly critical and niche industrial components like technical springs and special fastening solutions (nuts and bolts), which find applications in industries including automotive, railway and wind energy sectors.

Total IPO size (Rs cr) 168 Offer for sale (Rs cr) 33 Fresh issue (Rs cr) 135 Price band (Rs) 503 - 529 Subscription dates September 2-4, 2024 Purpose of issue To undertake capex and repay debt

IPO details

M-cap (Rs cr) 670 Net worth (Rs cr) 239 Promoter holding (%) 55.4 Price/earnings ratio (P/E) 30.1 Price/book ratio (P/B) 2.5

Post-IPO

Key financials 2Y growth (% pa) FY24 FY23 FY22   Revenue (Rs cr) 18.1 203 166 145   EBIT (Rs cr) 48.6 30 31 13   PAT (Rs cr) 83.8 22 24 7   Net worth (Rs cr) 105 84 59   Total debt 57 60 57

Financial history

*FY24 numbers are on a consolidated basis.  ** Earnings before interest and tax (EBIT) is adjusted for rental payments PAT is profit after tax

3Y average (%) FY24 FY23 FY22   ROE (%) 20.5 21.4 28.9 11.2   ROCE (%) 18.9 19.9 22.9 13.9   EBIT margin (%) 14.2 14.6 18.8 9.2   Debt-to-equity 0.5 0.7 1Ratios

Key ratios

*FY24 numbers are on a consolidated basis

The Good

The company’s products have to undergo a long-period of testing and audits before they can be commercialised. This ensures client stickiness. Hence, the company boasts an average relationship of over eight years with its top 10 clients.

The bad

The company’s market itself is a limiting factor. To know how, head on to our full story, which lays out a detailed analysis. Read it from the link below.

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