Gallard Steel Ltd. IPO Analysis

Gallard Steel Ltd. is gearing up to hit the markets with its Upcoming IPO of ₹ 37.5 cr., aiming to ride India’s booming infrastructure and manufacturing wave as demand for quality steel surges across sectors, making this debut one to watch for investors tracking the country’s next growth story.

Lets explore the IPO further:

The Gallard Steel Ltd Share Price will be finalized post-allotment, while grey market cues through the Gallard Steel Ltd IPO GMP will likely reflect market sentiment closer to listing.

Industry Overview

India is the world’s second-largest producer of crude steel, producing over 150 million tonnes (MT) of crude steel in FY25 and operating with a steelmaking capacity of around 200 MT. Domestic demand remains very strong, driven by infrastructure projects, construction, and manufacturing. 

The steel demand is estimated to grow by 9 –10% in FY25 as per ICRA. Looking ahead, the outlook is largely positive. The government aims to scale up capacity to 300 MT by 2030, through significant capital investment and policies like the PLI (Production-Linked Incentive) scheme for specialty and value-added steel. But challenges like raw material-cost pressures, import volatility, and the need for cleaner, low-carbon steel technology remain a concern.

Founded in 2015, Gallard Steel Limited is an engineering and manufacturing company that makes ready-to-use steel components like Ductile Iron and Grey Cast Iron Castings and special alloy Castings and components for some of India’s most important sectors like Railways, Defence, Power Generation, and Industrial Machinery. 

In the Railway sector, Gallard supplies crucial parts such as traction motor components, bogie assembly parts, etc. used in locomotives and LHB coaches. For the Defence sector, it manufactures heavy-duty items like cradle assemblies and recoiling cylinders used in tanks and artillery systems. It also produces components for industrial machinery and supplies rebonded foam to mattress manufacturers.

It is an RDSO-approved Class “A” Foundry, meaning it meets stringent Indian Railways quality standards. Currently, there are 6 players in the Indian market which hold this certification—out of which, many players are their competitors and their customers.

Overall, the business focuses on supplying high-precision, safe, and long-life steel components needed in sectors that rely on strong engineering and consistent performance.

Business Model

The company follows a manufacturing-driven B2B model where the company controls the entire journey from raw material to a fully finished, ready-to-use product which ensures consistent quality, faster turnaround and better cost efficiency.

Orders are typically custom-designed based on technical drawings and are made to exact specifications, which creates long-term, repeat demand. Its approval as an RDSO Class “A” Foundry also positions the company among the preferred suppliers for railway components.

Gallard has some subsidiaries which help in its business operations:

• Sleeploop India Private Limited (SIPL)
  SIPL contributes through two divisions:
  
  

  • CNC Machining Division – performs precision machining for components made at Gallard’s foundry, enhancing the company’s ability to deliver finished, fully machined products.
    
    

  • Rebonded Foam Division – manufactures foam sheets used by mattress and furniture companies from waste or discarded foam, which is processed and made into different sizes of mattresses. While this is a smaller, non-core vertical, it adds a diversified revenue stream and utilises waste materials effectively.
    
    

Gallard Steel Europe B.V.
This subsidiary has been created to build Gallard’s presence in Europe and support future exports of steel castings and machined components. It is not yet operational but is expected to help the company enter higher-value international markets.

In the iron and steel industry, due to non-differentiable products and low price control due to large competitors, the company must have a diverse product range with reasonable prices in order to gain long-term customers. 

Gallard Steel’s revenue is heavily concentrated in the Railways segment, which consistently contributes 75–84% of total income, indicating dependence on one customer. 

The sharp rise in Rebonded Foam from 0% in FY23 to nearly 20% in FY25 indicates rapid diversification, though it is not one of the core products of the company.

Contributions from Defence, Power and Industrial Machinery are minimal, indicating these verticals are still underdeveloped despite sector potential. 

While the portfolio shows stability from railway demand and new revenue from foam, there is still some room for diversification in defence, industrial equipment and hydro turbines—due to their sector growth.

Manufacturing Capacity 

Gallard Steel operates its main manufacturing facility in Madhya Pradesh, which is taken on lease for 30 years starting November 2015.

Gallard’s key subsidiary, Sleeploop India Pvt. Ltd. (SIPL), operates its CNC Machining and Rebonded Foam manufacturing units also from MP. 

The company’s second subsidiary, Gallard Steel Europe B.V., is based in the Netherlands and is a non-manufacturing entity, set up mainly for future export and business development activities.

The current capacity and its utilization are as follows:

Gallard Steel Ltd.                                                                    

Sleeploop India Pvt Ltd (Unit 1) 

Sleeploop India Pvt Ltd (Unit 2)    

The primary manufacturing activities, Gallard Steel Limited's Casting operations at 92.9% and SIPL's Unit 2 at 88%, are currently running at near-full capacity. SIPL's Rebonded Foam Unit 1 recorded significantly lower capacity utilization, standing at 40.4% for FY25.

Post IPO, the casting capacity will expand from 2,400 MT to 6,100 MT, and SIPL’s machining capacity will rise from 7,500 to 10,000 units per year. This expansion positions the company to capture larger orders in railways, defence and power while easing current utilisation pressures.

From Q2 FY27, September onwards they will start production on this incremental capacity.

Management & Governance

The promoters of the company including Zakiuddin Sujauddin, Hakimuddin Ghantawala, Kaid Johar Kalabhai, Zahabiya Kalabhai and Mariya Zakiuddin Sujaudddin, all have deep exposure to engineering and financial management. The company’s Managing Director, Zakiuddin Sujauddin, and Whole-Time Director & CFO, Hakimuddin Ghantawala, each bring over 16–19 years of industry and managerial experience. The operational backbone is supported by Chief Operating Officer Kaid Johar Kalabhai, who is also a promoter with long-term involvement in the company’s growth. 

The promoters holding Pre-IPO was 91.14% and Post IPO will be 67.16%. Thus, keeping the control in their hands to lead the company towards growth with their decisions.

One cautious point we found in the DRHP was that the company and certain of its directors have been subject to proceedings before the Hon’ble National Company Law Tribunal (“NCLT”) in relation with providing a loan to Ms. Zahabiya Kalabhai (Director) and Ms. Alifiya Ghantawala (Wife of CFO), which was in violation of the provisions of Section 185 of the Companies Act, 2013.

Gallard Steel shows a clear upward trend in scale and profitability, with revenue rising from ₹2,059 lakh in FY23 to ₹5,332 lakh in FY25, reflecting strong growth momentum. 

Profitability has improved sharply with EBITDA margins increasing from 9.2% to ~23%, supported by increase in volume and decreasing costs due to volatility of raw material costs. 

PAT margins nearly doubled over the period, moving from 5.5% to 11%, indicating stronger bottom-line quality. Return ratios are robust, with RoE consistently above 35–40% in the last two years, showcasing efficient capital use. 

Debt has been seen increasing yoy, due to expansion and investment in capex.

Overall, the company demonstrates strong financial momentum, margin expansion, and improving operational leverage.

Peers Comparison

*The company took a peer named Pritika Engineering Components Limited, which is not directly comparable on an apple on apple basis. So, we took more comparable companies for our analyses.

Gallard Steel Ltd. continues to demonstrate strong operational performance, with its EBITDA margin of 23.39% closely aligned with Medha Servo’s 22.1% and well above Porwal and Nitin Castings. 

Its PAT margin (11.38%), while lower than Medha’s 20.2%, remains materially stronger than listed peers, reflecting solid cost control. 

Return ratios remain a clear differentiator, with ROE at 43.16% and ROCE at 26.6%, significantly outperforming all listed comparables and even surpassing Medha on ROE.

Gallard’s valuation at 16.6x P/E and 12.6x EV/EBITDA appears moderate given its superior profitability, though not as low as Medha’s private-company multiples. 

While its D/E of 0.8 indicates higher leverage compared to peers, it remains manageable relative to its return profile. Overall, the peer set highlights Gallard as a high-margin, high-return player, competitively positioned despite a relatively levered capital structure.

• Expansion capex: Funding the expansion of the existing manufacturing facility and construction of a new office building.

• Debt reduction: Repayment of a portion of the borrowings availed by the company.

• General corporate purposes: To support routine business and strategic requirements.

Overall, the issue aims to strengthen Gallard Steel’s operational capacity while improving its financial flexibility. The combination of expansion and deleveraging positions the company for more sustainable future growth.

Strengths & Risks

Strengths 

• Order Books for next year from railways and defence which will help in revenue growth.

• Long-standing industry presence, helping the company build trust and credibility with stakeholders.

• One of major players in railways components with almost 70% of market share of railways components—directly and indirectly.

• Established relationship with customers, contributing to repeat business and stable revenue flow.

• Operational efficiency supported by management familiarity with supply chain and manufacturing practices.

Risks

• Higher contribution of revenue from Rebonded Foam; which is not the core business

• High customer concentration, with major dependence on a few key clients.

• Exposure to raw material price volatility impacting margins.

• Geographic concentration of operations in MP and West Bengal increases vulnerability to region-specific disruptions.

Company and its directors are under violations of Company Act, 2013.

Final Words

At Alpha Venture X Fund, we assess opportunities through our LMVT framework — Leadership, Moat, Valuation, and Tailwinds — enabling us to identify scalable businesses with durable fundamentals. 

Gallard Steel Ltd. IPO benefits from an experienced leadership team with a steady operational track record, driving consistent growth and healthy profitability. While the Moat remains largely execution-driven, the company’s planned capacity expansion and strengthening customer relationships position it to enhance its competitive footing over time.

From a Valuation standpoint, the issue appears reasonably priced relative to its superior margins and return metrics, though sustaining these levels will depend on the execution of  scale-up and diversification. Tailwinds from rising demand in steel processing and continued infrastructure activity provide a supportive environment for long-term expansion.

Overall, Gallard Steel represents a stable, efficiency-led manufacturing story backed by strong financials and disciplined operations. For long-term investors who favour steady compounding and operational resilience, this is a business worth monitoring closely.