Gala Precision Engineering Limited (GPEL) has become a stock market sensation, with its shares climbing 35% in just three trading sessions, reaching an all-time high of ₹1,480.80 on December 27, 2024. This surge represents a phenomenal 180% increase from its IPO price of ₹529 per share, just four months after its debut on September 9, 2024.
Industry Leader in Special Fastening Solutions and Precision Springs
GPEL stands out as a premier manufacturer of high-performance fastening solutions and precision springs. Its product portfolio spans over 750 stock-keeping units (SKUs), including high-tensile fasteners, Gallock wedge lock washers, coil and spiral springs (CSS), and disc and strip springs (DSS). These products serve diverse industries, from renewable energy and infrastructure to automotive and general engineering.
With an installed capacity of 225.5 million DSS units operating at an impressive 85% utilization rate, the company derives nearly 59.5% of its revenue from DSS production. Meanwhile, CSS contributes 20% of the revenue, supported by a utilization rate of 78%.
Catering to High-Growth Sectors
Gala Precision’s products find applications in sectors undergoing significant growth:
- Renewable Energy: As renewable sources are projected to account for 95% of the global power capacity increase from 2021-2026, the demand for precision fasteners used in wind turbines and hydroelectric plants is rising rapidly.
- Automotive and Mobility: Components like coil springs play a crucial role in vehicle suspensions, clutch systems, and shock absorbers. The expansion of the high-speed rail network and metro rail projects in India further boosts demand for advanced fastening and spring solutions.
Impressive Financial Trajectory
The company reported a 17% year-on-year (YoY) increase in profit after tax, reaching ₹11.7 crore for the first half of FY2024-25. Revenue from operations also grew by 9.1% YoY to ₹104.4 crore, while EBITDA margins improved to 19.4%, reflecting operational efficiency.
From FY2022 to FY2024, GPEL achieved a compound annual growth rate (CAGR) of 18% in revenue, along with an exceptional 57% CAGR in profit before tax. This solid financial performance underscores its ability to capitalize on market opportunities and maintain profitability.
Strategic Expansion and Technological Edge
To meet growing demand, Gala Precision has invested in state-of-the-art manufacturing facilities in Maharashtra and Tamil Nadu, enhancing production capacity and export capabilities. The company’s collaboration with German and Indian institutes for product innovation, coupled with in-house design expertise, has solidified its reputation as a leader in precision engineering.
Key Clients and Market Reach
GPEL boasts a robust client base that includes industry giants like Vestas Wind Technology, L&T Electrical & Automation, Schneider Electric, and Brembo Brake India. Its reliable supply chain, stringent product quality, and customer-centric approach make it a trusted partner across industries.
Brokerage Optimism for Future Growth
According to KRChoksey Shares and Securities, Gala Precision’s strategic expansion, favorable market conditions, and diversified portfolio position it for sustained growth in domestic and international markets. With a focus on renewable energy, automotive, and infrastructure sectors, the company is set to capture additional market share and further enhance shareholder value.
