Global Surfaces IPO opens. Should you subscribe to the issue?

The initial public offer of Global Surfaces opens on March 13 and will be available for subscription till March 15. Ahead of the issue, the company has raised about Rs 46 crore from anchor investors.

Leading Light Fund VCC - The Triumph Fund, Saint Capital Fund, and VPK Global Ventures Fund - Scheme 1 are among the investors who participated in the anchor round.

The company has set a price band of Rs 133-140. Investors can bid for 100 shares in 1 lot and in multiples thereof. The equity shares of the company are expected to list on both the exchanges on March 23.

According to market sources, the company is commanding a premium of Rs 35 as of March 10 in the unlisted market. Considering the issue band price of Rs 133-140, analysts say the expected listing price could be Rs 175, offering listing gains of up to 25%.

Religare broking said the company has a strong opportunity in the international market and its new products and designs would aid growth and increase operational efficiency. The brokerage has a "neutral" rating on the public offer.

"If we annualize FY23 earnings and consider post-IPO fully diluted paid-up equity capital, the asking price is at a P/E of around 21.84 if we expect the listing price to be Rs 175 and an EPS of Rs 8.01," said Manish Khanna, Co-Founder, Unlisted Assets.

"If we consider FY22 earnings, the P/E stands at 16.64 on the same expected listing price," he added.

"Some of the key risks for the IPO include high dependency on few customers and geography (US) for revenue. and not having any long term agreements with customers or suppliers, which can impact business operations," Religare broking said in a report.

The IPO comprises fresh issuance of 85.20 lakh equity shares and an Offer For Sale of up to 25.5 lakh equity shares by promoters -- Mayank Shah and Sweta Shah.

The company said IPO proceeds will be used for investment in its arm Global Surfaces FZE for part-financing its capex requirements of setting up the manufacturing facility in Dubai and other general corporate purposes.

Global Surfaces is in the business processing natural stones and manufacturing of engineered quartz. The company has two manufacturing facilities in Rajasthan. The Global Engineered Quartz market size was valued at $24,150 million in 2021 and is expected to grow at CAGR of 7-8% by 2026.

The company has clocked a total income of Rs 198 crore in fiscal 2022, while net profit after tax stood at Rs 35 crore. For the period ended September 2022, the company's income stood at Rs 99 crore and profit stood at Rs 13.6 crore.

In FY22, exports business accounted for 99.13% of its operating revenue. The company says its products have been successfully sold in several countries, including the United States of America, Canada, Australia, and the Middle East, in recent years.

Unistone Capital is the sole book running lead manager to the issue.

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