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  • Writer's pictureJatin Agarwal

Global Surfaces IPO

Updated: Mar 21, 2023


Company and IPO Overview:


The company Global Surfaces ltd is involved in the business of processing natural stones and manufacturing engineered quartz. Natural stones are produced by complex scientific and geological processes and include a number of products such as granite, limestone, marble, slate, quartzite, onyx, sandstone, travertine, and others that are quarried from the earth. Natural stones are widely known for their uniqueness, aesthetic appeal, texture, color, and composition as no two natural stones are the same. On the other hand engineered quartz, is an example of engineered stone used in the countertop industry, which is a composite material made up of crushed stone bonded by an adhesive. For example, for countertops, the slabs are made from quartz crystals bonded with a resin binder.


The Company has two units, one located at RIICO Industrial Area, Bagru Extn, Bagru, Jaipur, Rajasthan and the other at Mahindra World City SEZ, Jaipur, Rajasthan for processing and manufacturing of its products. Its Unit I is strategically located in close vicinity of the key raw material (i.e., Blocks of natural stones) which helps it in sourcing its raw materials and also minimize the logistics and transportation cost. Both the Units are located in close proximity of each other i.e., within a range of 20 Kms. from one another.


The products of Global surfaces ltd find its application in flooring, wall cladding, countertops, cut-to size and other items. Their products are used in both commercial and residential industry and are sold within and outside India. Majority of the operational revenues comprise of export sales, coming majorly from The United States of America, Canada, Australia and Middle East.

The company Global Surfaces ltd is going to raise around ₹155 crores via IPO that comprises fresh issue of 8,520,000 equity shares and offer for sale up to 2,550,000 equity shares of ₹10 each. The retail quota is 35%, QIB is 50%, and HNI is 15%.The Global Surfaces Ltd IPO is a main board IPO and it is going to get listed on NSE and BSE.


Financials (rounded off)

Date

Total Revenue (₹ in cr)

​​​PAT (₹ in cr)

​31/03/2020

166

20.96

31/03/2021

179

33.93

31/03/2022

198

35.63

Objectives of the Issue:

The Company proposes to utilize the Net Proceeds of the issue towards funding of the following objects:

· Investing in the wholly owned subsidiary, Global Surfaces FZE for part-financing its capital expenditure requirements in relation to the setting up of a manufacturing facility for engineered quartz at The Jebel Ali Free Zone, Dubai, United Arab Emirates (UAE);

· Other General corporate purposes.


IPO Details:

IPO Date

13/03/2023-15/03/2023

Face Value

₹10 per share

IPO Price Band

₹133-₹140 per share

IPO Lot Size

100 Shares

Listing at

NSE, BSE

Basis of Allotment

20/03/2023

Credit of Shares in Demat

22/03/2023

Listing Date

23/03/2023

Pre-Issue Shareholding

99.35%

Post-Issue Shareholding

-

Retail Minimum Lot Size

100 shares (₹14,000)


Valuations and Margins:

FY20

FY21

FY22

EPS (Rs.)

6.19

10.02

10.52

Debt/Equity

0.83

0.38

0.28

ROCE (%)

32.95

35.75

20.85

EBITDA (%)

24.69

27.05

21.97


PE Analysis of the Company with its peer:


The only nearest listed peer is Pokarna Limited. The same is available at P/E of 12x. Market Capitalization of Global Surfaces Ltd is ₹ 600 Cr, Sales ₹ 190 Cr, P/E = 13.50x, While its peer Pokarna has a Market Capitalization of ₹ 933, Sales ₹ 650 Cr. Pokarna ltd comes with 3.4x revenues and 2.5x EPS so, as compared to its peer this IPO looks slightly overpriced.



Important things to note about the company:


Top reasons to consider the IPO:

· The company has shown consistency in growth (year-on-year) despite being impacted by COVID-19.

· The company manufactures a wide portfolio of products with various designs

· The company maintains a quality control process where they inspect the quality of raw materials and the finished product which ensures the manufacture of quality products and also reduces losses.


Risk Factors to watch out in the IPO:

· Sales have grown from ₹166 Crores in FY20 to ₹190 Crores in FY22. The growth is around 8% which is not very good.

· At present company’s 100% revenue comes from export and 99% of that comes from US markets. Any problem in the US market will drastically affect the business significantly.

· Gross Margins and EBITDA margins both have been very unstable and are on a declining phase since the last 3 years.


Crisp Insights:

  • Grey Market Premium is currently ₹15.

  • Current Market Volatility is too much for any IPO to list with a good GMP.

  • Company should be kept on radar post listing and specially once the markets settle.


Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.






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