The Rs 155-crore initial public offering (IPO) of Global Surfaces Ltd opened for subscription on Monday, March 13 and would close on Wednesday, March 15. The company is selling its shares in the price band of Rs 133-140 apiece with a lot size of 100 equity shares.
The issue size is of 1,10,70,000 equity shares with a face value of Rs 10 each, which includes a fresh issue of Rs 85.20 lakh equity shares and an offer-for-sale (OFS) by its promoters and existing shareholders of 25.50 lakh equity shares.
Incorporated in 1991, Global Surfaces is engaged in processing natural stones and manufacturing engineered quartz. The company has two units in two different locations in Jaipur, Rajasthan. Both units engage in the processing and manufacturing of the products.
Domestic brokerage firm Jainam Broking has recommended to ‘subscribe for a short term’ to this issue as the company is dependent on few customers for major part of revenue; major portion of revenue is deriving from USA and about 99 per cent of revenue depend upon exports.
Natural stones are produced through complex geological processes and form various products like granite, limestone, marble, slate, quartzite, onyx, sandstone, travertine, and others that are quarried from the earth. Its products have applications in flooring, wall cladding, countertops, cut-to-size, and other items.
The net proceeds from the issue will be utilised towards capital expenditure requirements in relation to setting up a manufacturing facility for engineered quartz at The Jebel Ali Free Zone, Dubai, United Arab Emirates (UAE) and general corporate purposes.
However, analysts at Capital Markets remain ‘neutral’ on the issue. The EPS for FY2022 based on post issue expanded equity is Rs 8.4. The PE on the upper price band of asking price works out to about 16.7 times. In comparison, Pokorna is quoting at a PE of 11.8 times of its FY22 consolidated EPS, it said.
“Sales for fiscal ended March 2022 were up 9 per cent to Rs 190.31 crore and with OPM down by 500 bps to 22 per cent, the operating profit was down by 12 per cent to Rs 41.80 crore. Lower margin seems largely on account of increased share of cost of traded goods and logistics costs,” it added.
The company has reserved 50 per cent of the issue for qualified institutional buyers, whereas non-institutional investors will get 15 per cent of allocations. Retail investors will be allotted remaining 35 per cent of the share.
Unistone Capital is the sole book running lead manager to the issue whereas Bigshare Services has been appointed as the registrar to the issue. Shares of Global Surfaces will be listed on both BSE and NSE.
Krishna Raghavan- Founder at Unlistedkart said that the premium in the grey markets indicates that investors are showing positive interest in the company’s IPO. “However, investors should be cautious and make decisions after a thorough analysis of the company’s fundamentals and financials,” he said.
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