Gala Precision Engineering Ltd

Tax proceedings

• Income Tax Department proceedings at the company's premises have concluded with no material impact on operations.
• The company has extended full cooperation and will continue to provide information as required.
• Operations continued in the normal course during the income tax proceedings.

Tax proceedings

• Income Tax Department proceedings commenced on August 18, 2026.
• Proceedings are at the registered office and promoter Kirit Gala’s residence.
• Company cooperating and providing documents and clarifications; no specific violation communicated.
• No quantified impact on financials or operations; proceedings are ongoing.
• Company will inform exchanges of material developments under Regulation 30.

Financial Performance

• Q1 FY27 revenue from operations around INR 75 crores, +20% YoY.
• Q1 FY27 EBITDA around INR 12 crores; margin 16.51%.
• Net profit INR 8 crores, +29% YoY; PAT margin 11.44%.
• FY27 EBITDA margin guidance 17%–19%.
• Forward cover on EUR/USD around 40%; forex hedges in place.
• Tax rate guided around 20%; benefits from Section 35(1)(i) deductions and ESOP allowances.

Operational Update

• DSS sales grew 31% YoY; 54% of revenue in Q1 FY27.
• SFS contributes 29% of revenue, INR 223 million.
• CSS contributes 17% of revenue, INR 125 million.
• HDG plant commissioned at Chennai; bolt development completed.
• MoU for acquisition of 10.15 acres at Wada to support expansion.
• New hot-dip galvanized facility installed at Chennai.

Capacity and Capex

• Chennai Phase 1 utilization ~70–80% in Q1; ~80–90% in Q2.
• Phase 2 capacity partly in Q3; Phase 1–2 utilization ~70% by Q4.
• Chennai Phase 2 mezzanine floor 10,000 sq ft; completion by Q2.
• Wada land capex planned ~INR 40–45 crores next year.
• 15 acre Wada land MoU under due diligence; press release forthcoming.

Guidance and Outlook

• FY27 guidance: revenue growth 20–25% YoY; margins 17–19%.
• Wind turbine fastener contribution ~10% of total fastener sales by FY27.
• Q1 wind-turbine fastener share of total sales ~25–26%.
• Chennai utilization to reach ~70% by year-end; Phase 2 adds capacity.
• First bulk order from electrolyzer manufacturer highlights diversification.

Q&A Highlights

• KPMG engaged for working-capital optimization; actions planned by Q3.
• Order book ~INR 110 crores on July 1; prior year ~INR 80–85 crores.
• Chennai HDG in-house reduced outsourcing cost; enabled new orders.
• Kitting contributes ~15–17% of sales; could rise to 15–20% per demand.
• Aerospace/defense entry remains exploratory; no near-term impact.

Earnings call update

• Audio recording of earnings call for quarter ended June 30, 2026 held on 07 Aug 2026 is released.
• Recording is available on Gala Precision Engineering's website at www.galagroup.com.

Issue Overview

• IPO of Equity Shares.
• Total issue size and net proceeds disclosed; no revision/undersubscription.
• Objects include setting up Tamil Nadu facility; capex for Wada; debt repayment; general corporate purposes.

Utilisation of Proceeds

• Utilisation is as disclosed; no material deviations observed.
• Facility deployment remains partial; significant unutilised funds and delays.
• Wada capex largely deployed; minimal unutilised funds; no major delay.
• Borrowings fully repaid; no unutilised funds.
• GCP largely unutilised; funds parked in fixed deposits and monitoring account.
• Issue expenses fully utilised.
• Unutilised proceeds total are held in fixed deposits and a monitoring account.

Governance and Compliance

• All statutory approvals for objects obtained.
• GCP allocation approved by the Board; resolution dated Aug 6, 2026.
• No material adverse events or regulatory actions reported.
• Machinery procurement and vendor changes discussed; flexibility allowed per prospectus.
• Note 2 documents government approvals obtained for the objects.
• Fund deployment delays noted; dates extended to subsequent periods.

General Corporate Purpose (GCP)

• GCP utilised for automation at Chennai plant and M&A advisory fees.
• Board approved the GCP allocations with August 6, 2026 resolution.
• Total GCP utilisation remains a small portion of gross proceeds.
• Note 13 confirms board approval for GCP heads.

Business Overview

• Renowned manufacturer of precision components, including high-tensile fasteners and springs.
• Exports to 25+ countries; Frankfurt office supports international sales.
• In-house tool design and scalable manufacturing enable customized solutions across renewables, industrials, and mobility.

Operational Highlights

• Q1 FY27 order bookings up about 40% YoY.
• First bulk commercial order from a leading electrolyzer manufacturer.
• KPMG engaged for Working Capital Optimisation to improve cash conversion.
• MoU for 10.15 acres at Wada to support capacity expansion.
• DSS sales grew 31% YoY.
• HDG plant commissioned and productionised at Chennai facility.
• Bolt development for industrial construction equipment completed.
• Export revenues accounted for 33.7% of Q1 FY27.
• Wada capacity: 225.5 million units; utilization 85%.
• Vallam capacity: 4,600 MT; FY26 utilization 35%, expected 70% in FY27.
• Marquee clients include ABB, Siemens Energy, John Deere India.

Financial Performance

• Revenue from operations: INR 754 Mn, +19.5% YoY.
• EBITDA: INR 123 Mn, +28.1% YoY; margin 16.31%.
• PAT: INR 82 Mn; PAT margin 10.88%; EPS INR 6.25.
• Export revenue share: 33.7% in Q1 FY27.
• FY26: revenue INR 3,143 Mn; EBITDA INR 519 Mn; PAT INR 355 Mn.
• IPO funds received: INR 1,212.4 Mn in monitoring account.
• Loan repayment funded INR 454.3 Mn from IPO proceeds.
• Chennai CAPEX funded INR 297.3 Mn; Wada CAPEX INR 110.5 Mn.
• General corporate purposes funded INR 11.4 Mn.
• Balance available for deployment: INR 339.0 Mn.

Strategic Priorities & Outlook

• Identify opportunities for Gala products in Hydrogen value chain / Electrolyzer.
• Expand product range in fasteners and springs to address larger market.
• Increase export presence by hiring locals and warehousing in Europe and USA.
• Move up the value chain with advanced materials, kitting, smart fasteners.
• Enhance application engineering and deepen customer engagement through customized solutions.

Filing Status

• No deviation or variation in IPO proceeds utilization for quarter ended 30 June 2026.
• Audit Committee reviewed NIL deviation; report enclosed.

Standalone results

• Standalone Q1 FY27: total income 76.52 cr; PAT 8.21 cr; EPS 6.41 (basic), 6.26 (diluted).
• PBT 9.64 cr; tax current 1.73, deferred (0.30).
• IPO net proceeds 121.24 cr; unutilized 33.90 cr at 30-Jun-2026.
• ESOPs issued: 18,650 shares in quarter.

Consolidated results

• Q1 FY27 consolidated: revenue 75.38 cr; total income 76.52 cr; PAT 8.20 cr; EPS 6.41/6.25.
• Total income consolidated 76.52 cr; expenses: material 32.57, employee 10.78; PBT 9.62.

Dematerialisation processing and listing

• Securities received for dematerialisation in the reporting quarter were confirmed and listed on the stock exchanges.
• Physical certificates received for dematerialisation were mutilated and cancelled after verification; depository's name substituted as owner.