Anlon Health IPO review

•    The company is engaged in the manufacture and marketing of specialized APIs as per global standards.
•    It claims to be the first one to manufacture Loxoprofen and related products.
•    The company marked set back in its top line for FY24 following its registration process with Brazil.
•    Based on its recent financial data, the IPO appears aggressively priced.
•    Only well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Anlon Healthcare Ltd. (AHL) is a chemical manufacturing company engaged in manufacturing of; (i) high purity advance pharmaceutical intermediates (“Pharma Intermediate”) which serves as raw material/ key starting material in the manufacturing of active pharmaceutical ingredients; and (ii) active pharmaceutical ingredients (“APIs”) which serves as a raw material for pharmaceutical formulations in preparation of various type of Finished Dosage Formula (“FDF”) such as tablet, capsules, ointment, syrup etc, ingredients in nutraceuticals formulations, personal care products and animal health products. Its products span across the family of pharmaceutical intermediates, active pharmaceutical ingredients, nutraceutical APIs and ingredients for personal care and veterinary API. AHL’s active pharmaceutical ingredient products are manufactured in accordance with Indian and international pharmacopeia standards such as IP, BP, EP, JP, USP.

AHL is one of the few manufacturers of loxoprofen sodium dihydrate in India, which is a notable API widely used in treatment of pain/inflammation association with conditions including rheumatoid arthritis, osteoarthritis, lower back pain, frozen shoulder, neck-shoulder-arm syndrome, tooth pain or after surgery, injury or tooth extraction (Source: D&B Report).

In addition to the manufacturing of Pharma Intermediate and APIs in accordance with various domestic and international standards, it has recently started undertaking custom manufacturing services for complex or novel chemical compounds, tailoring the manufacturing process to meet specific customer requirements, including producing chemicals with purity levels that exceed industry standards. Its domain knowledge and expertise enable the company to reduce existing impurities and employ appropriate processes to achieve the desired level of purity.

The company also undertakes API development, preparation and filing of Drug Master File (“DMF”) in the Indian and global markets as per the pharmacopeia requirements of customers and regulatory agencies. As on date, it has received approval for Drug Master File from (i) Brazilian Health Regulatory Agency (“ANVISA, Brazil”) for API product namely, loxoprofen sodium dihydrate; (ii) National Medical Products Administration, China (“NMPA, China”) for API product namely, loxoprofen sodium dihydrate; (iii) Pharmaceuticals and Medical Devices Agency, Japan (“PMDA, Japan”) for API product namely, loxoprofen sodium dihydrate and loxoprofen acid. Further, as on date, it has filed twenty-one (21) DMF with regulatory authorities of European Union, Russia, Japan, South Korea, Iran, Jordan, Pakistan amongst other and is in process of filing DMF for approval of Ketoprofen with regulatory authority of USA and Dexketoprofen Trometamol with regulatory authority of Spain, Italy, Germany, Slovenia.

As on the date of this Red Herring Prospectus, its product portfolio consists of sixty-five (65) commercialized products and twenty-eight (28) products which are at pilot stage and forty-nine (49) products which are at laboratory testing stage/ laboratory scale stage. As of June 30, 2025, it had 105 employees (including 4 contract labours).

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO for 13300000 equity shares (worth Rs. 121.03 cr. at the upper cap). The company has announced a price band of Rs. 86 – Rs. 91 per equity shares of Rs. 10 each. The issue opens for subscription on August 26, 2025, and will close on August 29, 2025. The minimum application to be made is for 164 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 25.02% of the post-IPO paid up equity capital. From the net proceeds of the fresh issue, the company will utilize Rs. 30.72 cr. for capex on expansion, Rs. 5.00 cr. for repayment/prepayment of certain borrowings, Rs. 43.15 cr. for working capital, and the rest for general corporate purposes.

The sole Book Running Lead Manager (BRLM) to this issue is Interactive Financial Services Ltd., while KFin Technologies Ltd. is the registrar to the issue. 

The company has issued/converted initial equity shares at par value. It issued further equity shares in the price range of Rs. 13.00 – Rs. 49.00 per share between July 2018, and July 2024. The average cost of acquisition of shares by the promoters is Rs. 10.64, and Rs. 10.95 per share. 

Post-IPO, its current paid-up equity capital of Rs. 39.85 cr. will stand enhanced to Rs. 53.15 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 483.68 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 113.12 cr. / Rs. 5.82 cr. (FY23), Rs. 66.69 cr. / Rs. 9.66 cr. (FY24), and Rs. 120.46 cr. / Rs. 20.52 cr. (FY25). According to the management, the set back in top line for FY24 is attributed to closure of plant for 4 months to attain modification as required for registration/certification with Brazil customer. The company has opted for high margin API products that has resulted in higher profits from FY24 onwards as it turned qualified for many monopoly products.

The company has allocated at least 75% for QIBs, not more than 15% for non-institutional/HNIs, and not more than 10% for Retail investors. 

For the last three fiscals, the company has posted an average EPS of Rs. 6.23 and an average RoNW of 56.92%. The issue is priced at a P/BV of 4.51 based on its NAV of Rs. 20.18 as of March 31, 2025, and at a P/BV of 2.40 based on its post-IPO NAV of Rs. 37.90 per share (at the upper cap).

If we attribute FY25 super earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 23.58. Based on FY24 earnings, the P/E stands at 50.00. The issue appears aggressively priced.

The company has posted PAT margins of 5.16% (FY23), 14.50% (FY24), 17.06% (FY25), and RoCE margins of 17.16%, 16.29%, 21.93%, respectively for the referred periods.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It has adopted a dividend policy in August 2024, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Kronox Lab, Acutaas Health, Supriya Lifescience, as their listed peers. They are trading at a P/E of 24.6, 61.7, and 31.2 (as of August 22, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 25th mandate from Interactive Financial in the last five fiscals (including the ongoing one). Out of last 11 listings (including 1 mainboard), 3 opened at discount, and the rest with premium ranging from 2.50% to 90.00 % on the date of listing.