Gala Precision On Track To Maintain Growth, Margins Post-IPO
The Ebitda margin of GPEL has picked up from 15% three years ago to 20% now.
Gala Precision Engineering Ltd. is on track to maintain its growth rate and Ebitda margins in the upcoming years after its successful initial public offering, according to the company’s top executives.
Shares of GPEL ended on the BSE on Monday at Rs 787.4 apiece, a premium of 48.8% over its issue price of Rs 529 per share. On the National Stock Exchange, the stock closed at Rs 757.1 per share, marking a premium of 43.1%. The precision component manufacturer's Rs 167.9-crore IPO has become the second biggest subscription so far in 2024.
Commenting on the post-IPO financial scenario for the company, Executive Director Balkishan Jalan said the compound annual growth rate would remain in the range of 25% for the upcoming years.
"Historically, in the last three years, we have been able to grow at a CAGR of 25%," Jalan told NDTV Profit. "The type of markets which we are catering to, considering the market and the capacity that we are putting up, we are expecting a similar kind of growth in the coming years as well."
Considering everything, in the coming years, too, we are expecting similar kinds of gross margins and similar types of Ebitda margins of 18–20%.Executive Director Balkishan Jalan
GPEL Chairperson Kirit Vishanji Gala said the company has three product categories — disc springs, coil springs and fasteners. "We cater to three geographical markets — India, Europe and the United States, and we address three market verticals," the managing director said.
The Ebitda margins of GPEL have picked up from 15% three years ago to 20% now, while the gross margins have remained in the range of 59%. Jalan expressed confidence that the company would be able to sustain margins.
"We are present in three verticals — renewable, electrical and mobility — and have an export of around 40%. There's a mix of margins, which comes from different end industries, end customers, Indian markets and the global market," Jalan said,
After the successful IPO worth Rs 167.9 crore, GPEL plans to use the net proceeds for setting up a plant near Chennai and investing capital expenditure in its existing plant in Wada, Maharashtra.
Jalan explained in detail about how they are going to use the funds. Out of Rs 135.3 crore raised through fresh equity, the company will be deploying Rs 37 crore for its new facility in Sriperumbudur, Tamil Nadu. "The capacity in the rupee term will be approximately Rs 110 crore to Rs 120 crore, which will be generated from this capex all put together."
The company is expecting to make this facility operational by the end of the current financial year.
GPEL will put a capex of Rs 11.1 crore into its existing manufacturing facility in Wada, Palghar. "The additional turnover will be approximately Rs 42 crore to Rs 45 crore from this additional capex."
