Global Surfaces Limited IPO analysis

About the Company

The 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. 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.

The product portfolio of the company can be categorized into natural stones and engineered stones.

A. Natural Stones - 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, colour, and composition as no two natural stones are the same.

Natural stones have a wide range of applications in large-scale constructions such as the construction of government buildings, churches, monuments, and road construction

The natural stone product segment can be further divided into:

1.  Marble
2. Granite
3.  Quartzite and others

B. Engineered Stones - Engineered stone, is a composite material formed out of crushed stone that is held together by an adhesive. The various types of engineered stones are:

1. Engineered quartz
2. Polymer concrete
3. Engineered marble

Industry Analysis

The global natural and engineered stone (combined) market is expected to account for $65,746 million in 2022 and is expected to reach $1,14,504 million by 2032.

In the year 2022, the natural stone segment is expected to account for a major 59% of the market share with $38,829 million while the contribution of the engineered stone segment stood at $26,917 million.

The market for natural stones in India is expected to grow considerably in the coming few years. India has rich reserves of stones due to its diverse geographical location. India holds 3rd place in the global production of natural stones and holds nearly 11% share of the global natural stone market

In 2022, the Indian natural stone market is estimated at $5,213 million. Going forward, the market is expected to reach $10,074 million in 2032.

The Indian engineered stone market is estimated to be valued at $3,643 million in 2022. By the year 2032, the Indian engineered stone market is expected to reach $7,355 million

Objects of the offer

1. Investment in our 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”) (“Proposed Facility”)

2. General Corporate Purpose

Key Financials

Valuation

As per the RHP, the company has only one listed peer viz., Pokarna Limited

1. The company’s PE on the upper price of Rs.140 comes to 17 times and the industry average PE is 22 times, indicating a slight undervaluation.

2. The company’s PB on the upper price is Rs.140 is 3.18 times and the industry PB is around 1.84 times indicating an overvalued issue

IPO Details

1. The issue is open for subscription from 13^th March - 15^th March 2023

2. The IPO has a lot size of 100 shares with a price band of Rs.133 - Rs.140 and retail individual investors can apply for a maximum of 14 lots worth Rs. 1,96,000/-

3. The issue size is 157.98 crores out of which 35.7 crores is a fresh issue and the balance is OFS.

4. As of releasing the blog the grey market premium is around 19.29%