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Gala Precision is a manufacturer of technical springs (DSS, CSS) and special fastening solutions (SFS), serving OEMs and various industries globally, including renewable energy and automotive sectors. The company holds significant market shares, especially in the renewable industry, and exports to over 25 countries. With advanced manufacturing facilities in Maharashtra and a new plant under development in Tamil Nadu, Gala emphasizes innovation, quality, and customer-focused design.

Objects and Details of the Issue:

The public issue consists of Offer For Sale aggregating up to Rs 33 Cr. And fresh issue up to Rs 135 Cr. Company proposes to utilize the Net Proceeds towards:-

(i) Setting up a new facility at Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu for manufacturing high tensile fasteners and hex bolts:- 37 Cr.

(ii) Funding capex requirements towards purchase of equipment, plant and machinery at Wada: - 11 Cr.

(iii) Repayment of certain borrowings: - 45 Cr.

Investment Rationale:

* Well-established manufacturer of precision engineering components with a diversified product portfolio and market presence.

* Long-standing customer relationships with Indian and global OEMs.

* Moving up the value chain from niche markets to large addressable markets.

* Leveraging in-house design and development capabilities to grow product offerings and capitalize on future trends.

* Expanding manufacturing capacity at existing facilities and setting up an additional strategically located facility.

Valuation and Recommendation:-

Over the last decade, Gala has strategically moved up the value chain and expanded into larger addressable markets which are growing at faster rates and strengthened its position in the Indian and global markets. This is also reflected in its robust revenue CAGR of 18 % over FY22-24. Further, with high entry barriers such as lengthy approval process and customer stickiness due to criticality of products, Gala commands superior EBITDA margins of ~19% compared to peer average of ~17%. Given the company’s positioning with respect to future growth opportunities (focus on renewable energy sector), superior financials and undemanding valuations, we recommend ‘Subscribe’ to the issue.

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