Global Surfaces Limited is engaged in processing natural stones and manufacturing engineered quartz. Global Surfaces IPO opens for subscription on 13th March, 2023. Company has stable revenue and margin growth in the last few years. Should you invest in Global Surfaces IPO? Is it a risky or rewarding opportunity of investing in this IPO?
Global Surfaces IPO – Key Details
| IPO Opening Date | 13-Mar-23 |
| IPO Closing Date | 15-Mar-23 |
| IPO Listing Date | 23-Mar-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 10 per equity share |
| IPO Price band | Rs 133 to Rs 140 per equity share |
| Lot Size | 100 Shares |
| Min Order Quantity | 100 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 154.98 Crores |
| Fresh issue | Rs. 119.28 Crores |
| OFS | Rs. 35.7 Crores |
| QIB shares offered | Not less than 50% of the offer |
| NII/HNI shares offered | Not more than 15% of the offer |
| Retail shares offered | Not more than 35% of the offer |
Global Surfaces IPO Prospectus
Global Surfaces IPO – A Deep Dive into the Company’s Business Model
Company is engaged in the business of processing natural stones and manufacturing engineered quartz.
Natural stones are produced by complex 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.
Engineered quartz on the other hand, 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.
How is the Financial Performance of the company?
| Financial Year ending / Period ending (Amt in Crores) | ||||
| Particulars | FY20 | FY21 | FY22 | Sep-22 |
|---|---|---|---|---|
| Total Assets | 128.7 | 159.0 | 236.5 | 280.2 |
| Revenues | 165.8 | 179.0 | 198.4 | 99.3 |
| Profit After Tax | 21.0 | 33.9 | 35.6 | 13.6 |
| Profit % | 12.64% | 18.96% | 17.96% | 13.69% |
What are the Objects of the Offer?
Company objects of the offer is for Offer for sale and fresh proceeds. Fresh proceeds would be used for the following:
- Investment 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);
- General corporate purposes.
Global Surfaces IPO – Valuation Analysis
Its IPO price band is Rs 133 to Rs 140.
If we consider last year FY22 EPS of Rs 10.52, P/E ratio works out to be 13.3x.
If we consider last 3 years weighted average EPS of Rs 9.63, P/E ratio works out to be 14.5x.
Even if we consider 6 months ended Sep-22 EPS of Rs 8.02 and annualize it, P/E ratio works out to be 17.46x.
It has only one listed peer i.e. Pokarna Limited whose shares are trading at P/E 29.5x. It is not appropriate to compare with a single company. Considering P/E of 13x to 17.4x, we can conclude that it is attractively priced.
Global Surfaces IPO – Top Reasons to invest
Global Surfaces Limited is engaged in processing natural stones and manufacturing engineered quartz.
Company has a wide product portfolio and multiple designs with an established presence in international markets.
Company has stable revenue growth in the last 3 years and 6 months.
Company margins have improved in FY22 compared to FY20. However, we could see a dip in margins for the period ended Sep-22 compared to earlier years.
Global Surfaces IPO – Key Risks and Negative Factors
On the risks side:
Continuing impact of Covid pandemic on the business is uncertain and might continue in the future too.
Company depends on a few customers on the major part of its revenues.
Major exports are done to USA and any adverse developments in this markets can impact the company.
Investors should read all internal and external risk factors before investing in this IPO.
Global Surfaces IPO – Review and Conclusion
Global Surfaces Limited is engaged in processing natural stones and manufacturing engineered quartz and with a wide product portfolio and multiple designs. It has generated stable revenue and margin growth in the last few years. Company IPO price is attractively priced.
On the other side, company margins for the Sep-22 period has declined compared to previous years. Company depends on few customers and globally its footprint is in the USA which poses risks in case of any adverse development in such markets.
High risk investors can invest in this IPO with medium to long term perspective.
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