Natural stone processor Global Surfaces made a stellar debut on the bourses on Thursday beating gray market expectations. The stock got listed on the NSE at Rs 164 per share, up 17 per cent, as against the issue price of Rs 140. The stock debuted at Rs 163 on BSE.
The stock was commanding an 11 per cent premium in the gray market over its issue price before listing, according to IPO Watch.
The stock touched a single-day high of Rs 172.2 on the NSE and finally closed at Rs 172.15, up 23 per cent over the issue price. The market capitalization of the company stood at Rs 729.6 crore.
The initial public offering of Global Surface was subscribed 12.2 times. The retail portion of the issue was subscribed 5.1 times, while the high net worth portion (HNI) was covered up to 33 times. The institutional investor portion of the issue was subscribed to around 9 per cent.
Through the IPO, Global Surface issued new shares worth about Rs 120 crore. The offering also included secondary share sale for Rs 36 crore. The price band for the IPO was Rs 133-140 per share.
Global Surface is engaged in the processing of natural stones and also manufactures engineered quartz. Under Natural Stones, the B2B seller processes Granites, Marbles, Soft Quartzite, Phyllites, and Soapstone, while under Engineered Quartz, it manufactures Stratum, Prismatic, Kalamasa, and Aurora.
The company’s natural stones are widely used in flooring, wall cladding, countertops, cut-to-size and other items for commercial and residential purposes. Engineered quartz is also used prominently in the countertop industry.
It earns 99 percent of its revenue from overseas markets such as the US, Canada and the Middle East. Segment-wise, engineered quartz makes up 83 percent of its revenue while natural stone makes up 17 percent.
The company aims to use the proceeds of the IPO to set up a manufacturing facility in Jebel Ali Free Trade Zone, Dubai, United Arab Emirates, which is expected to start production by FY24.
Dubai is centrally located and new manufacturing lines have been strategically set up in the free trade zone. This location of manufacturing units near the port optimizes freight and transportation charges. Companies and production facilities located in Dubai’s free trade zone are also exempted from income tax, it said in its roadshow presentation.
Furthermore, given the imposition of anti-dumping duty on the import of quartz surface products from China, India and Turkey, it is a strategic move by the company to set up a facility in Dubai to expand its presence in the US.
Meanwhile, in a pre-IPO note, analysts at Anand Rathi Brokers gave the company an ‘Avoid’ rating citing “sectoral headwinds, higher revenue concentration from the US and other countries, challenging external environment and increased competitive intensity” was recommended.
“On the valuation front, Global Surface is valued at 16.7x post-issue FY22 PE and 21.8x its FY23 annualized earnings, which is significantly valued compared to its only listed peer Pokorna Ltd, which is trading at a P/E of 29.5 doing. x as FY22 earnings,” the note said.
