Gala Precision Engineering Ltd. – FY25 & Q4 FY25 Highlights Financial & Performance Overview: - FY25 Revenue: ₹453 crore (+33% YoY); Q4 revenue: ₹125 crore (+34.2% YoY, +7% QoQ). - Margins & Profitability: FY25 EBITDA margin 36.3%, near record levels; Q4 margin at 36.5%. PAT grew 52% YoY to ₹89 crore. - Cash & Leverage: Post-IPO, negligible net debt (~₹-412 crore), strong liquidity, and ample surplus funds. Debt primarily in the form of working capital (~₹243 crore). Operational & Strategic Initiatives: - Capacity & Expansion: - New Chennai facility dedicated to high-tensile fasteners (bolts) with Phase I operational; Phase II (additional 70,000–75,000 sq. m.) under development. - Current utilization at 70%; focus on process enhancement for future growth. - Capex planned at ₹50–60 crore in FY26 mainly for infrastructure, land acquisition, and capacity expansion. - Product & Market Diversification: - Over 750 SKUs, serving ~175 global customers across 25 countries. - Strong export push, with exports contributing ~35%–40% of revenue, especially in fasteners and high-grade specialty materials. - New product launches such as Grip Lock washer for construction equipment, expanding product portfolio and markets. Market & Industry Environment: - Demand Trends: - Robust growth from renewable energy, industrial, and mobility sectors. - Industry tailwinds from infrastructure growth, increasing urbanization, and domestic manufacturing thrust. - Tariffs & Trade Dynamics: - US tariffs on Indian exports (~10%) are on customer account; no competitive disadvantage expected. - No evidence of pre-buying or slowdown due to tariffs; current order pipeline aligned with expectations. - Chinese competitors face higher tariffs (35–55%), creating opportunities for Gala in US and European markets. Cost & Margin Management: - Margins compressed in FY25 due to product mix and one-offs; gross margins stable at ~49%. - Focus on operational efficiencies, product mix, and diversified raw material sourcing to sustain margins. - Raw material imports (~7% volume, ~18% value), mainly specialized steels and Inconel, with ongoing efforts to develop local suppliers. Customer & Business Development: - Key clients include global OEMs (e.g., GE Vernova, Mitsubishi, Rolls-Royce); diversified across energy, aerospace, and industrial sectors. - Focus on deepening existing relationships and expanding into new markets (India, US, Europe, Africa). - International expansion via setting up or acquiring local manufacturing facilities, especially in Saudi Arabia and Africa. Inorganic Growth & Future Outlook: - Open to M&A opportunities in India and globally; evaluation ongoing for strategic targets. - Management remains confident of 20–25% revenue growth in FY26, driven by capacity expansion, new product launches, and increased export share. - EBITDA margins expected to stabilize around 17–19%, with PAT margins at 10–12%. - Capex continued for infrastructure, existing capacity optimization, and land acquisition. Management Tone & Outlook: - Highly optimistic about sustained long-term growth, leveraging operating leverage, product innovation, and global client relationships. - Focused on diversification, margin stability, and strategic expansion, particularly in high-growth sectors. - Risks related to working capital, raw material imports, and macro trade uncertainties are actively managed. Summary: Gala Precision is executing a disciplined growth strategy with significant capacity expansion, product diversification, and international market penetration. Post-IPO strong balance sheet and cash surplus underpin confidence, while ongoing product innovations and market expansion support a robust outlook. The management’s tone remains optimistic about achieving 20–25% growth in FY26, with margins expected to stay stable amid market tailwinds and operational efficiencies.