Gallard Steel BSE SME IPO review (Not Rated)

•    The company is engaged in the manufacturing of ready to use components, assemblies and sub-assemblies for Indian Railways, Defense, Power Generation and allied industries.
•    It posted growth in its top and bottom lines for the reported periods. 
•    Inflated earnings for FY25 onwards compared to its peers raises eyebrows.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Gallard Steel Ltd. (GSL) is an engineering company engaged in the manufacturing of ready-to-use components, assemblies, and subassemblies for Indian railways, defense, power generation and allied industries. Its product portfolio includes critical components such as traction motor components and bogie assembly components for the railway sector, sub-assemblies for thermal and hydro turbines used in the power generation sector and components for industrial machinery, equipment and the defence sector.  These components are manufactured using unmachined and machined castings made from metals including carbon steel, ductile iron, grey cast iron and medium and low alloy steels. GSL’s clientele primarily comprises companies operating in the heavy engineering, railways and defence sector.

In the railway sector, it supplies components for the production of traction motors and bogie assemblies, including control arms for FIAT LHB coaches, stator frames for various motors used by railways for manufacturing of traction motors serving the railway and heavy engineering industries. In the defence sector, it manufactures components such as cradles and recoiling assembly cylinders for government defence production units. In the power generation sector, the company manufactures guide vanes, bush housings and fork systems for heavy engineering companies, which are used in hydro and thermal power generation. In components for industrial machinery and equipment, it manufactures High Temperature Resistance Liner and other components.

The company holds Class ‘A’ Foundry Status from the Research Designs and Standards Organization (RDSO), Ministry of Railways, confirming compliance with IS: 12117:1996 (Reaffirmed 2022). In addition, it has been approved by the competent authority under Indian Railways for capacity-cum-capability assessment to develop, manufacture and supply various critical components for electric locomotives and traction motors, including Suspension Tubes, Axle Boxes, Gear Cases, Axle Box housing and Control Arms. It is also an approved vendor for supplying critical components for defense applications, including Cradle Assemblies and Steel Castings, as per specific technical requirements. In February 2024, the company acquired SIPL, and also incorporated foreign subsidiary company - GSE B.V. in October 2025, which has yet to commence its business operations. As of September 28, 2025, it had 64 employees on its payroll and additional 53 contract workers.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 2500000 equity shares of Rs. 10 to mobilize Rs. 37.50 cr. at the upper cap. The issue opens for subscription on November 19, 2025, and will close on November 21, 2025. The company has announced a price band of Rs. 142 – Rs. 150 per share. The minimum number of shares to be applied is for 2000 shares and in multiples of 1000 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.32% of the post-IPO paid-up capital of the company. From the net proceeds, the company will utilize Rs. 7.20 cr. for repayment/prepayment of certain borrowings, Rs. 20.73 cr. for capex on expansion of existing plant, and the rest for general corporate purposes. 

The IPO is solely lead managed by Seren Capital Pvt. Ltd., and Ankit Consultancy Pvt. Ltd., is the registrar to the issue. Asnani Stock Broker Pvt. Ltd., is the Market Maker as well as a syndicate member.

After issuing initial equity shares at par value, the company converted further equity shares at a fixed price of Rs. 160 per share in September 2024. It has also issued bonus shares in the ratio of 3 for 4 in March 2024. The average cost of acquisition of shares by the promoters is Rs. NIL, Rs. 0.04, Rs. 4.14, Rs. 5.71, and Rs. 20.66 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 7.50 cr. will stand enhanced to Rs. 9.50 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 142.50 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit, of Rs. 21.65 cr. / Rs. 1.13 cr. (FY23), Rs. 27.86 cr. / Rs. 3.20 cr. (FY24), and Rs. 53.52 cr. / Rs. 6.07 cr. (FY25). For H1 of FY26 ended on September 30, 2025, it earned a net profit of Rs. 4.29 cr. on a total revenue of Rs. 32.14 cr. It posted growth in its top and bottom lines for the reported periods. Its higher PAT margins against listed peers’ surprises and raises concern over its sustainability going forward.

For the last three fiscals, the company has reported an average EPS of Rs. 6.44 and an average RoNW of 30.52%. The issue is priced at a P/BV of 4.91 based on its NAV of Rs. 30.54 as of September 30, 2025, but its post-IPO NAV data is missing from offer documents.

If we attribute FY26 annualized super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 16.59. Based on FY25 earnings, the P/E stands at 23.47. The issue relatively appears fully priced. 

For the reported periods, the company has posted PAT margins of 5.51% (FY23), 11.91% (FY24), 11.38%, (FY25), 13.60% (H1-FY26), and RoCE margins of 14.23%, 16.42%, 26.59%, 15.52%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Nitin Casting, Pritika Engg., as its listed peers. They are currently trading at a P/E of 19.2 and 34.2 (as of November 14, 2025. However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash. 

MERCHANT BANKER’S TRACK RECORD:
This is the 4th mandate from Seren Capital in the ongoing fiscal.  From the last 3 listings so far, all listed with a premium ranging from 16.42% to 29.17% on the listing date.