Gala Precision Engineering IPO subscribed over 52 times on day 2 of issue, NII portion booked 132x; Latest GMP here

Gala Precision Engineering IPO: The initial public offering (IPO) of precision components manufacturer Gala Precision Engineering Limited was subscribed more than 52 times on the second day of its issue. The mainboard IPO of the Maharashtra-based company opened for subscription on Monday, September 2, and will close on Wednesday, September 4.

Gala Precision Engineering IPO will fetch ₹167.93 crore at the upper end of the price band. The company has reserved not more than 50 per cent of the shares in the public issue for qualified institutional buyers (QIB), not less than 15 per cent for non-institutional Institutional Investors (NII), and not less than 35 per cent of the offer is reserved for retail investors.

Also Read: Gala Precision Engineering IPO opens on Monday. GMP, review, other details in 10 points

Gala Precision Engineering IPO Subscription Status

On the second day of issue, Gala Precision Engineering IPO was subscribed 52.21 times. The portion reserved for NIIs was booked the highest at 132.93 times, the portion reserved for QIBs was booked 5.06 times, and the portion reserved for retail investors was booked 44.21 times. The IPO received 11,61,01,412 share applications against 22,23,830 shares offered on Tuesday.

On the first day of issue, the IPO was oversubscribed 10.84 times. Investors bid for 2.41 crore shares compared to the 22.23 lakh shares available. NIIs subscribed to the public issue the most at 20.72 times their allotted portion on the first day. Check the IPO's day 1 subscription status here

Gala Precision Engineering IPO Details

 The IPO consists of a fresh issue of up to 25,58,416 equity shares and an offer for sale (OFS) of up to 6,16,000 equity shares by the promoter group and individual selling shareholders. The price band for the offer has been determined at ₹503 – ₹529 per equity share.

Investors can bid for at least 28 equity shares and in multiples of 28 equity shares thereafter. The floor price is 50.3 times the face value of the equity shares, and the cap price is 52.9 times the face value of the equity shares.

Also Read: Gala Precision Engineering IPO: Firm mobilises ₹50 crore from anchor investors; Subscription window opens on Sept 2

According to the draft red herring prospectus (DRHP), promoters hold a 74.56 per cent stake in the company, with the remaining shares held by the public, including Pooja Unichem LLP. In the OFS, promoter Vishanji Harshi Gala will be the primary selling shareholder, intending to divest 3,85,200 equity shares. 

The remainder of the shares, totalling 2,30,800 equity shares, will be sold by Kirit Vishanji Gala (HUF), Nayna Gala, Satish Kotwani, Hemlata Dhiraj Shah, Dhiraj Nanchand Shah, Urmil Dhiraj Shah, and Rupa Sunil Mehta.

PL Capital Markets Private Limited is the book-running lead manager of the Gala Precision Engineering IPO, while Link Intime India Private Ltd is the registrar for the issue. Tentatively, Gala Precision Engineering's IPO basis of allotment of shares will be finalised on Thursday, September 5. 

The company will initiate refunds on Friday, September 6, and the shares will be credited to the demat account of allottees on the same day following the refund. Gala Precision Engineering's share price will likely be listed on BSE and NSE on Monday, September 9.

Also Read: Gala Precision Engineering IPO: From financials to key risks...8 key points to know from RHP

Gala Precision Engineering Company Details

Gala Precision Engineering manufactures precision components such as disc and strip springs (DSS), coil and spiral springs (CSS), and special fastening solutions (SFS). The company supplies these products to original equipment manufacturers (OEMs).

The company's products are used in sectors such as electrical, off-highway equipment, infrastructure, and general engineering, as well as in mobility segments such as automotive and railway. The company has supplied its technical springs and high-tensile fasteners to customers in several countries, including Germany, Denmark, China, Italy, Brazil, the USA, Sweden, and Switzerland, making it a crucial link in the global supply chain for OEMs.

The company intends to use the net proceeds to finance the following goals: establishing a new facility in Vallam-Vadagal, Sriperumbuddur, Tamil Nadu, to manufacture hex bolts and high-tensile fasteners; financing the capital expenditure needed to buy machinery, plant, and equipment in Wada, Palghar, Maharashtra; repaying or prepaying some of the company's borrowed funds, in full or in part; and general corporate purposes.

Also Read: Gala Precision Engineering IPO booked 10.84x on Day 1. Know GMP, subscription status. Apply or not?

Gala Precision Engineering IPO GMP Today

GMP or grey market premium was ₹230. This indicates that Gala Precision Engineering's share price was trading at a premium of ₹230 in the grey market, according to investorgain.com. 

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Gala Precision Engineering was indicated at ₹759 apiece, which is 43.48 per cent higher than the IPO price of ₹529. 'Grey market premium' indicates investors' readiness to pay more than the issue price.

Gala Precision Engineering IPO Review

According to domestic brokerage Master Capital Services, Gala Precision Engineering has long-standing customer relationships with Indian and global OEM and Tier 1 players. It has well-equipped manufacturing facilities, in-house design, and other capabilities that offer scale, flexibility, and comprehensive solutions. The company has positioned itself to take advantage of these trends and has developed a notable market share in its domestic and global segments.

Also Read: Gala Precision Engineering IPO to open for subscription on September 2; price band set at ₹503-529 apiece

Among key risks, the loss of any of the company’s key customers or a significant reduction in its productions and sales of, or demand for its products from key customers may adversely affect business. The company does not have any exclusivity arrangements with the customers or suppliers. 

‘’The company is focusing on strengthening its core capabilities in precision engineering for increased sustainability, and they are moving up their operations and the value chain from niche markets to large addressable markets. The company also plans to leverage in-house design and development capabilities to grow its product offerings and capitalize on future trends. Investors looking to invest can invest in the IPO for the medium to long term,'' said Master Capital Services on Gala Precision Engineering IPO.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.