Gala Precision seems to have wind blowing in its favour
Gala Precision Engineering, a component manufacturer with applications in wind power generation, industrial, and automotive sectors, plans to raise ₹167 crore through an initial public offering (IPO). Of this amount, ₹135 crore will be from fresh issuance to fund brownfield and greenfield capacity expansions, which could potentially double the company's revenue over the next three years. The remaining amount is an offer for sale by the promoter, reducing the promoter's stake from 75% to 55% post-IPO. Gala Precision is focused on non-commodity product offerings where competition is lower and is gradually increasing its exposure to the mobility segment through its fastener products, driving incremental growth.
The strong prospects for wind power capacity expansion, with increasing contributions to renewable energy, are expected to drive the company's earnings growth. Given these factors, long-term investors may consider subscribing to the company's IPO.
Business Model: Incorporated in 2009, Maharashtra-based Gala Precision manufactures disc and strip springs, coil and spiral springs, and fasteners with a wide range of applications across various industries. For example, a car's clutch typically requires 6-8 springs, each costing around ₹35-40. In wind power machinery, springs account for about 2% of the total installation cost. The industrial segment contributes 40% of the company's revenue, renewable energy contributes 31%, and the mobility segment accounts for 28%, with clients including Brembo Brake, Endurance
