Gallard Steel IPO Overview
Indore-based engineering steel castings manufacturer raising ₹37.50 cr (100% fresh issue). Price: ₹142-150. Lot: 1,000 shares (₹3,00,000 min for 2 lots). Funds for facility expansion (₹20.14 cr), debt repayment (₹7.2 cr).
Listing: BSE SME Nov 26. Lead: Seren Capital. 78% revenue from railways – extreme sector concentration risk. Competes with Nitin Casting, Pritika Engineering.
IPO DETAILED INFORMATION
Issue Details
| Parameter | Details |
| IPO Type | SME |
| IPO Open Date | 19 November 2025 (Wednesday) |
| IPO Close Date | 21 November 2025 (Friday) |
| Anchor Investor Bidding | 18 November 2025 (Tuesday) – 7,09,000 shares (28.36%) allocated to anchors |
| Allotment Date | 24 November 2025 (Monday) – Expected |
| Credit to Demat | 25 November 2025 (Tuesday) – Expected |
| Refund Initiation | 25 November 2025 (Tuesday) – Expected |
| Listing Date | 26 November 2025 (Wednesday) – Tentative |
| Price Band | ₹142 – ₹150 per share |
| Face Value | ₹10 per share |
| Lot Size | 1,000 shares |
| Min Investment (Retail) | ₹3,00,000 (2 lots of 2,000 shares at upper band) |
| Min Investment (HNI) | ₹4,50,000 (3 lots of 3,000 shares) |
| Issue Size | ₹37.50 crore total |
| Fresh Issue | ₹37.50 crore (100%) – 25,00,000 shares |
| Offer for Sale (OFS) | ₹0 (0%) – No OFS component |
| Total Shares Offered | 25,00,000 equity shares |
| Listing | BSE SME Platform |
| Post-Issue Market Cap | ~₹132 crore (at upper price band) |
| P/E Ratio | ~16.6x (FY26 annualized basis) |
| EPS | ₹6.44 (FY23-25 average) |
| ROE/RoNW | 30.52% (FY23-25 average) |
| ROCE | 26.59% (FY25) |
Issue Break-up
| Category | Allocation |
| QIB (Qualified Institutional Buyers) | 50% of Net Offer (47.32% including Ex-Anchor: 18.96%) |
| NII (Non-Institutional Investors) | 15% of Net Offer (14.40%) |
| Retail Individual Investors | 35% of Net Offer (33.28%) |
| Anchor Investors | 7,09,000 shares (28.36% of total issue) |
| Market Maker | 1,25,000 shares (5% of issue) |
Selling Shareholder (OFS)
No OFS Component – This is a 100% fresh issue with all proceeds going to the company.
Promoters (Pre-IPO: 91.14% stake, Post-IPO: 67.16% stake):
- Zakiuddin Sujauddin – Managing Director & Promoter
- Hakimuddin Ghantawala – Whole-Time Director, CFO & Promoter (CFA, 15 years experience)
- Kaid Johar Kalabhai – Promoter
- Zahabiya Kalabhai – Non-Executive Director & Promoter (6 years administrative experience)
- Mariya Zakiuddin Sujauddin – Promoter
Note: Promoters maintaining 67.16% controlling stake post-IPO, diluting only 23.98% for growth capital.
Objects of the Issue (Fund Utilization)
Fresh Issue Proceeds (₹37.50 crore) will be used for:
- Expansion of Manufacturing Facility & Office Construction – ₹20.14 crore (53.7%)
- Expanding existing manufacturing facility at Pithampur, Dhar, Madhya Pradesh
- Constructing new office building
- Enhancing production capacity to meet growing order book from railways, defence, power sectors
- Repayment/Prepayment of Borrowings – ₹7.20 crore (19.2%)
- Reducing debt obligations for healthier balance sheet
- Lowering financial leverage and interest burden
- Improving debt-to-equity ratio
- General Corporate Purposes – Balance amount (~27.1% or ₹10.16 crore)
- Working capital requirements
- Strategic business initiatives
- Operational expenses
Strategic Focus:
- Scale up manufacturing capacity to capture growing demand from railways, defence, power sectors
- Strengthen balance sheet by reducing debt
- Support working capital for larger order execution
- Position for long-term growth in infrastructure and heavy engineering sectors
OFS Proceeds: N/A – No OFS component
Note: 100% fresh capital infusion indicates strong growth intent rather than promoter exit.
Lead Managers & Registrar
Book Running Lead Manager (BRLM):
- Seren Capital Private Limited
- Office: 601-605, Raylon Arcade, Kondivita, J.B. Nagar, Mumbai – 400059
- Phone: +91-22-46011058
- Website: www.suncapitalservices.co.in
- Track Record: 4th mandate in FY25-26; previous 3 listings delivered 16.42%-29.17% listing gains
Registrar:
- Ankit Consultancy Private Limited
- Office: 60, Electronic Complex, Pardeshipura, Indore (M.P.) – 452010
- Phone: +91 0731-4949444
- Website: www.ankitonline.com
Market Maker:
- Asnani Stock Broker Private Limited
Promoters & Management
Key Promoters:
- Zakiuddin Sujauddin – Managing Director & Promoter (age not disclosed)
- B.A. (Hons.) from De Montfort University, UK (2005)
- 19 years total experience, 10 years in cast components
- Started career as Procurement Manager at Khalid Al Dabbus, Kuwait (supply chain & customer relations until 2015)
- Co-founded Gallard Steel in 2015
- Oversees strategy, business development, client relationships
- Hakimuddin Ghantawala – Whole-Time Director, CFO & Promoter (age not disclosed)
- CFA (2006), Masters in Finance from ICFAI University (2007)
- 15 years experience in finance, accounts, sales, marketing
- Previously worked at Alcock Ash Down Gujarat Ltd. and as Finance Manager at World Wide Auctioneers, UAE (2009-2013)
- Co-founded Gallard Steel in 2015
- Manages finance, accounts, sales, marketing functions
- Zahabiya Kalabhai – Non-Executive Director & Promoter (since 2018)
- B.Com graduate from Devi Ahilya Vishwavidyalaya (2008)
- 6 years administrative experience
- Kaid Johar Kalabhai – Promoter
- Mariya Zakiuddin Sujauddin – Promoter
Company History:
- 2015: Founded in Indore, Madhya Pradesh by Zakiuddin Sujauddin and Hakimuddin Ghantawala
- 2024 (February): Acquired Sleeploop India Private Limited (SIPL) as wholly-owned subsidiary for CNC machining and rebonded foam manufacturing
- 2025 (October 21): Incorporated Gallard Steel Europe B.V. in Netherlands for European market presence and export growth
- 2025 (November): Launching IPO for capacity expansion and debt reduction
Company Contact:
- Registered Office: G-1, Sukh Sneh Apartments, Plot No. 168-M, Khatiwala Tank, Indore, Madhya Pradesh – 452014
- Phone: +91-9644422252
- Website: www.gallardsteel.com
COMPANY OVERVIEW
Establishment & Background:
- Founded in 2015 (10 years of operations)
- Industry: Engineering & Manufacturing – Steel Castings for Heavy Engineering
- Headquarters: Pithampur, Dhar, Madhya Pradesh (12,195 sq. meters facility)
- One of the approved Class ‘A’ Foundries for Indian Railways (RDSO certified)
- ISO 9001:2015 certified manufacturing facility
- 53 employees as of September 28, 2025
Business Model:
- End-to-end manufacturing of ready-to-use steel components for railways, defence, power generation, industrial machinery
- Product Portfolio:
- Railway Components: Traction motor components, bogie assembly parts, control arms for FIAT LHB coaches, suspension tubes, axle boxes, gear cases, stator frames, rotor rings, magnet frames
- Defence Components: Cradle assemblies for battle tanks, recoiling assembly cylinders, trunnion housings
- Power Generation Components: Guide vanes, bush housings, fork systems for thermal & hydro turbines
- Industrial Machinery Components: High-temperature resistance liners, heavy-engineering castings
- Rebonded Foam: Through subsidiary SIPL for mattress manufacturers
- Manufacturing Capabilities:
- Engineered steel castings using mild steel, SGCI (ductile iron), grey cast iron, medium and low alloy steels
- In-house processes: Melting, heat treatment, grinding, moulding, sand mixing, finishing
- Integrated casting and machining through subsidiary SIPL (CNC machining division)
- Quality testing for material composition, mechanical properties, defect detection
- Revenue Model:
- Supply contracts with heavy engineering companies, government defence units, railway manufacturing entities
- Repeat purchase orders from established clients (no long-term binding agreements)
- Revenue from component sales, assemblies, sub-assemblies
- Value Proposition:
- RDSO Class ‘A’ Foundry certification – meeting stringent Indian Railways quality standards
- Approved vendor for critical railway and defence components
- Fully integrated in-house manufacturing reducing external dependencies
- Precision-engineered components for mission-critical applications
Market Position:
- Among 6 players in India holding RDSO Class ‘A’ Foundry certification for railways
- Serving clients across 14 states and 1 union territory
- Strong presence in Madhya Pradesh (53% of revenues as of September 2025)
- Serving Indian Railways, defence production units, power equipment manufacturers, industrial OEMs
Operations:
- 53 employees as of September 28, 2025
- Main Facility: Pithampur, Dhar, Madhya Pradesh (12,195 sq. meters, ISO 9001:2015 certified)
- Subsidiary Operations:
- Sleeploop India Private Limited (SIPL) – acquired February 2024, wholly-owned
- Two divisions: CNC machining and rebonded foam manufacturing
- Handles precision machining, finishing, customization of cast components
- International Subsidiary:
- Gallard Steel Europe B.V., Netherlands (incorporated October 21, 2025)
- Yet to commence operations
- Intended for European market presence and export facilitation
- Revenue Mix (H1 FY26):
- Railway traction motor & bogie components: 78.88%
- Defence, power generation, industrial: 21.12%
- Geographic Revenue (FY25):
- Madhya Pradesh: 53%+
- 13 other states + 1 union territory: 47%
- Customer Concentration (H1 FY26):
- Top 10 customers: 84.74% of revenue
- Similar high concentration in FY25 (87.48%), FY24 (92.20%), FY23 (86.33%)
COMPANY STRENGTHS
1. RDSO Class ‘A’ Foundry Status – Rare Certification Providing Competitive Moat:
- Holds prestigious Class ‘A’ Foundry certification from RDSO (Research Designs and Standards Organisation), Ministry of Railways
- Compliance with IS: 12117:1996 (Reaffirmed 2022) standards
- Approved for capacity-cum-capability assessment to develop, manufacture and supply critical railway components
- Authorization for electric locomotive and traction motor components: Suspension Tubes, Axle Boxes, Gear Cases, Axle Box Housing, Control Arms
- Only 6 players in India hold this certification – significant entry barrier
- Certification provides credibility with government clients and large engineering companies
2. Strong Financial Turnaround – Revenue Doubled, PAT +90% (FY24 to FY25):
- FY25 Total Income: ₹53.52 cr (+92% vs ₹27.86 cr FY24) – remarkable growth
- FY25 Revenue from Operations: ₹53.32 cr (+98.77% vs ₹26.82 cr FY24)
- FY25 PAT: ₹6.07 cr (+89.84% vs ₹3.20 cr FY24)
- FY25 EBITDA: ₹12.47 cr vs ₹5.07 cr FY24 – more than doubled
- PAT margins: 11.38% (FY25), 11.91% (FY24), improving from 5.51% (FY23)
- EBITDA margins: ~23% (FY25) vs 9.2% (FY23) – substantial expansion
- ROCE margins: 26.59% (FY25), 16.42% (FY24), 14.23% (FY23) – consistent improvement
- H1 FY26: ₹4.29 cr PAT on ₹32.14 cr revenue (13.60% margin) – momentum continuing
3. Fully Integrated Manufacturing – Cost Control & Quality Assurance:
- Complete in-house capabilities: Melting, heat treatment, grinding, moulding, sand mixing, finishing
- Vertical integration through subsidiary SIPL for precision CNC machining
- Reduces external dependencies and outsourcing costs
- Better process coordination and reduced production lead times
- Enhanced quality control throughout manufacturing chain
- In-house testing for material composition, mechanical properties, defect detection
- ISO 9001:2015 certified facility ensuring quality standards
4. Strategic Diversification Across Critical Sectors – Railways, Defence, Power:
- Multi-sector presence reduces single-industry risk
- Railways: Traction motors, bogie assemblies, control arms – 78%+ revenue
- Defence: Cradle assemblies, recoiling cylinders for government defence units
- Power Generation: Turbine components for thermal and hydro power plants
- Industrial Machinery: High-temperature liners and heavy-engineering components
- Exposure to high-growth government-backed sectors (Make in India, Atmanirbhar Bharat, infrastructure push)
- Diversified customer base across heavy engineering, government entities, private sector
5. Strong Return Ratios – RoNW 30.52%, ROCE 26.59% (FY25):
- Average RoNW: 30.52% (FY23-25) – excellent capital efficiency
- ROCE: 26.59% (FY25), 16.42% (FY24), 14.23% (FY23) – improving trend
- P/BV: 4.91 based on NAV of ₹30.54 (September 30, 2025)
- Strong profitability on invested capital
- Efficient use of promoter equity and working capital
6. Government Push for Railways, Defence, Infrastructure – Sector Tailwinds:
- Indian Railways massive modernization and expansion programs
- Government focus on Atmanirbhar Bharat (self-reliant India) for defence production
- Make in India initiative boosting domestic manufacturing
- National Steel Policy 2017 targeting 300 MT production capacity by 2030-31
- India’s steel consumption growing from 57.6 kg to 74.1 kg per capita (recent 5 years)
- Target to double rural steel consumption to 38 kg per capita by 2030-31
- Infrastructure spending surge (roads, railways, power, urban development)
- Defence modernization and indigenization creating local sourcing demand
7. Acquisition of SIPL & Europe Subsidiary – Expansion & Export Focus:
- February 2024 acquisition of Sleeploop India Private Limited (SIPL) – wholly owned subsidiary
- SIPL provides CNC machining capabilities and rebonded foam division
- Adds machining capacity without external dependency
- Gallard Steel Europe B.V. incorporated October 21, 2025 in Netherlands
- European subsidiary for market presence and export facilitation
- Indicates management’s ambition for geographic expansion beyond India
- Export potential for steel castings and machined components
KEY RISKS & CHALLENGES
1. Extreme Sector Concentration – 78% Revenue from Railways Alone:
- Railway sector contributes 78.88% of revenue (H1 FY26) – catastrophic dependency
- Similar concentration: 77.04% (FY25), 83.55% (FY24), 76.20% (FY23)
- Specifically traction motor and bogie assembly components dominate revenue
- Any slowdown in Indian Railways capex, budget cuts, project delays materially impacts business
- Technological shifts (electrification changes, new motor designs) could render products obsolete
- Single sector risk magnifies impact of policy changes or demand fluctuations
- Limited diversification despite presence in defence and power sectors
2. High Customer Concentration – Top 10 Clients 85%+ of Revenue:
- Top 10 customers: 84.74% (H1 FY26), 87.48% (FY25), 92.20% (FY24), 86.33% (FY23)
- Extreme dependence on handful of large clients
- No long-term supply agreements – relying on repeat purchase orders only
- Loss of even one major customer significantly impacts revenue
- Clients can reduce, delay, or cancel orders without long-term binding commitments
- Revenue predictability and visibility limited
- Bargaining power lies with large customers, potential pricing pressure
3. Inflated Margins vs Peers – Sustainability Concerns:
- PAT margins (11.38% FY25, 13.60% H1 FY26) higher than listed peers
- Listed peers: Nitin Casting (P/E 19.2), Pritika Engineering (P/E 34.2) – not truly comparable
- Analyst concerns about sustainability of such high margins going forward
- Potential margin compression as competition intensifies or input costs rise
- Question mark over whether current profitability is sustainable long-term
- Small scale (₹53 cr revenue) may not provide economies of scale advantages
4. Small Scale & SME Platform – Limited Liquidity & Migration Challenges:
- Very small issue size: ₹37.50 cr
- Post-IPO market cap: ~₹132 cr – tiny compared to large-cap industrials
- Listing on BSE SME platform (not mainboard) – lower liquidity, limited analyst coverage
- Small equity base post-IPO indicates longer gestation period for mainboard migration
- Institutional investors typically avoid SME stocks due to liquidity concerns
- Limited float and trading volumes may lead to high volatility
- Exit options for investors restricted compared to mainboard listings
5. Valuation Concerns – P/E 16.6x on Annualized H1 FY26 Earnings:
- Issue priced at P/E 16.59 (based on FY26 annualized earnings from H1)
- P/BV of 4.91 based on NAV of ₹30.54
- Analyst view: Issue appears fully priced based on recent financial data
- Little margin of safety given sector concentration risks
- Valuation assumes continuation of FY25’s exceptional growth and margins
- Any disappointment in earnings growth triggers sharp correction
- Premium valuation for SME with execution and scalability uncertainties
6. Operational & Legal Risks – Leased Facilities, Ongoing NCLT Proceedings:
- Company does not own its manufacturing facility and registered office
- Operating on leased premises – any lease disputes or non-renewal disrupts operations
- Business continuity risk from dependence on lease agreements
- NCLT proceedings against company and directors per DRHP
- Related to loans provided to Director Ms. Zahabiya Kalabhai and Ms. Alifiya Ghantawala (CFO’s wife)
- Alleged violation of Section 185 of Companies Act, 2013
- Legal proceedings could result in penalties, cash flow impact, management distraction
- Reputational risk from corporate governance issues
7. Single Facility Risk & Regional Concentration:
- Entire manufacturing concentrated at single facility in Pithampur, Madhya Pradesh
- Any shutdown, disruption, fire, accident, regulatory action severely impacts production
- 53% of revenues from Madhya Pradesh – geographic concentration risk
- Susceptible to regional disruptions (natural disasters, local policy changes, infrastructure issues)
- No backup or alternate production facility
- Supply chain disruptions or logistics bottlenecks in region affect entire business
- Limited geographic diversification despite supplying to 14 states
8. Working Capital Intensity & Debt Repayment Requirements:
- High working capital requirements for manufacturing operations
- Despite debt repayment of ₹7.2 cr from IPO proceeds, reliance on debt funding
- Manufacturing business requires continuous capex for capacity maintenance and expansion
- Future debt needs for working capital or expansion could increase financial leverage
- Steel price volatility directly impacts raw material costs and margins
- Input cost fluctuations (carbon steel, ductile iron, alloy steels) affect profitability
9. Intense Competition & Limited Differentiation:
- Competing with 5 other RDSO Class ‘A’ Foundries in India – some are also customers
- Competition from both organized and unorganized steel casting manufacturers
- Listed peers: Nitin Casting, Pritika Engineering with potentially greater scale
- Low product differentiation in commodity-like steel castings
- Price-based competition erodes margins
- Clients can switch suppliers if quality or pricing not competitive
- Limited brand value or proprietary technology providing sustainable competitive advantage
DISCLAIMER
Important Notice: This information is based on publicly available sources including SEBI DRHP/RHP filings, company disclosures, and market reports. Investors should conduct their own thorough research and consult with qualified financial advisors before making any investment decisions. Past performance is not indicative of future results.
Key Risk Summary: The company has extreme sector concentration (78% revenue from railways alone), high customer concentration (85% from top 10 clients), no long-term supply agreements, operates on leased facilities, ongoing NCLT legal proceedings, single manufacturing location risk, and is listing on BSE SME platform with limited liquidity. The issue appears fully priced at P/E 16.6x despite small scale and execution risks. While financial performance has been strong (revenue doubled, PAT +90% in FY25), sustainability of inflated margins vs peers is questionable.
Grey Market Premium: GMP of ₹40 (27% expected listing gain) is unofficial, volatile, and not guaranteed. It can change dramatically before listing based on market conditions and demand. GMP is for informational purposes only and should not be the sole basis for investment decisions.
Investment Suitability: Suitable only for well-informed, risk-tolerant investors with long-term investment horizon and ability to handle SME stock volatility. Not suitable for conservative investors or those seeking liquidity and stability.
No Investment Advice: This document does not constitute investment advice, recommendation, or solicitation. Investors must evaluate their own financial situation, risk tolerance, and investment objectives before applying for this IPO.
