Gala Precision Engineering share price post decent listing, gains 5% to hit upper limit on the NSE: Buy or Sell?

Stock Market today: Gala Precision Engineering share price opened at ₹721.10 on NSE and ₹750 on BSE, both reflecting substantial premiums over the IPO price. The share price thereby rose to ₹757.15 on the NSE hitting upper circuit limit while hit high of ₹787 on the BSE.

Post decent listing gains and rise in share price, analysts are of the opinion to book certain part of listing gains

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said that Despite pressure in the markets, Gala Precision managed to list in line with our expectations. Even though the offer was fully priced on the higher side with OFS, Gala Precision received a healthy 201x subscription demand considering the market optimism at the time offer bidding.

Considering its business model of manufacturing precision components having specialization in technical springs and the healthy listing gain above 40%, Tapse recommends allotted investors to choose booking profits on the listing day.

Considering its business model of manufacturing precision components having specialization in technical springs and the healthy listing gain above 40%, We recommended allotted investors to choose booking profits on the listing day.

Shivani Nyati, Head of Wealth at Swastika Investmart Ltd. said that *Gala Precision Engineering Limited (GPEL) made a strong debut on the stock market, listing at Rs. 750 per share, a significant 41% premium over its issue price of Rs. 529. This positive performance reflects the company's robust fundamentals and the strong investor interest evident in the IPO's oversubscription of 201.41 times.

Investors who participated in the IPO are likely sitting on a healthy profit, but it's important to maintain a cautious approach and continue monitoring the company's performance and market conditions. Despite the promising listing, factors such as industry trends, competition, and global economic conditions may still influence the long-term trajectory, said Nyati

For those considering holding it, you may keep a stoploss at 675, added Nyati

Strong subscription and GMP already indicated good listing gains

The subscription received by the Gala Precision Engineering IPO and the Grey Market Premium had indicated towards the strong opening and listing gains for the investors.

Gala Precision Engineering IPO had been subscribed more than 200 times by the 4 September, 2024 (Day 3).

In the unlisted market, shares of Gala Precision Engineering were trading at a reasonable premium. The current IPO GMP for Gala Precision Engineering IPO stood at ₹245 per share as per investorgain.com. This shows that, in comparison to its IPO price, Gala Precision Engineering shares were trading ₹245 higher in the gray market.

The market was thereby expecting the listing of the Gala Precision Engineering share price at ₹774, 46.31% above the issue price of ₹529.

About Gala Precision Engineering and issue objectives

The ₹167.93 crore Gala Precision Engineering IPO is a book-built issue. The issue consisted of an offer for sale for 0.06 crore shares, valued at ₹32.59 crores, and a new issuance of 0.26 crore shares, valued at ₹135.34 crores.

The Gala Precision Engineering products are utilized in mobility segments including automobile and railway, as well as in industries like electrical, off-highway equipment, infrastructure, and general engineering.

The company is an essential link in the global supply chain for OEMs, having supplied its high tensile fasteners and specialized springs to customers in Germany, Denmark, China, Italy, Brazil, USA, Sweden, and Switzerland.

The company plans to use the Net Proceeds from the IPO to finance the establishment of a new facility for the production of hex bolts and high tensile fasteners at Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu

for the financing of necessary capital expenditures for the acquisition of machinery, plant, and equipment at Wada, Palghar, Maharashtra

For the repayment or prepayment, in full or in part, of certain loans that the company has taken

and for the general corporate purposes.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.