Aptus Pharma BSE SME IPO review (Not Rated)

•    The company is engaged in the business of marketing and distribution of finished pharma formulations.
•    It does not have its own manufacturing unit, but does the business on third party contract.
•    The company posted growth in its top and bottom lines for the reported period, however, sudden boost in bottom line for FY25 raise eyebrows and concern over its sustainability.
•    Based on its recent financial data, the issue appears aggressively priced.
•    Only well-informed/risk seekers/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Aptus Pharma Ltd. (APL) is engaged in the business of marketing, and distribution of finished pharmaceutical formulations. While the Company does not own any manufacturing facilities, it operates through a contract manufacturing model. It does not own any manufacturing plants but has entered into contract manufacturing agreement with seven manufacturing units. under various arrangements. Of these, it has formal loan and license agreements in place with two manufacturing units. The remaining production is carried out through informal arrangements with other manufacturers, based on purchase orders (PO). 

The company provides a diverse range of pharmaceutical products catering to various therapeutic categories including anti-infectives, gastrointestinal, antacids, anti-allergic and respiratory, nutritional supplements, pain management, neuro-psychiatric, cardiovascular, anti-diabetic, lipid-lowering, and general wellness products. These are offered across a variety of dosage forms, such as tablets, capsules, soft gels, syrups, suspensions, injections, ointments, creams, balms, drops, lotions, vials, powders, gels, and sachets.

As on March 31, 2025, its product basket comprises of 194 pharmaceutical formulations in more than eleven (11) therapeutic segments. Its products are sold under own brand names, developed through contract manufacturers and registered or applied for registration by the Company. It has a distribution network of more than 125 direct and Sub distributors and a sales team comprising more than 54 field personnel including Medical Representatives (MRs), Area Sales Managers (ASMs), Divisional Sales Managers (DSMs), Regional Sales Managers (RSMs), and a Zonal Manager. Its distribution is managed through a central clearing and forwarding (C&F) agent based at Ahmedabad.

The company has established its presence across Two states in India—Gujarat and West Bengal. Gujarat remains largest market in terms of revenue contribution and product penetration. It has initiated steps to expand into new domestic markets including Maharashtra, Goa, Rajasthan, Madhya Pradesh and Chhattisgarh over the next two financial years. In addition, it has commenced groundwork to initiate exports and marketing in targeted foreign markets to capitalize on emerging opportunities.

It follows an asset-light business model and do not own any manufacturing facilities. All its pharmaceutical products are manufactured through third-party contract manufacturers, based in Gujarat, Solan (Himachal Pradesh) and Roorkee (Uttarakhand). Of these, it has entered into loan and license agreements with two units. Its manufacturing partners are selected based on stringent quality, compliance, and delivery standards. These manufacturers are required to hold WHO-GMP, Certifications, and are subject to periodic review and audits by company’s quality assurance team. Before placing purchase orders with contract manufacturers, it ensures about their certifications, clientele, manufacturing infrastructure, and their delivery capabilities through proper due diligence and proper documentation with regards to defined terms for quality control parameters, packaging standards, lead times, and logistics. Pioneer division has the lion share in its top lines, and Gujarat lead the revenue pack for the company. As of May 31, 2025, it had 70 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 1860000 equity shares to mobilize Rs. 13.02 cr. at the upper cap. It has announced a price band of Rs. 65 – Rs. 70 per share of Rs. 10 each.  The IPO opens for subscription on September 23, 2025, and will close on September 25, 2025. The minimum application to be made is for 4000 shares and in multiple of 2000 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 27.11% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 8.00 cr. for working capital, Rs. 1.63 cr. for capex on office premises with furniture and industrial racks, and the rest for general corporate purpose.

The IPO is solely lead managed by Interactive Financial Services Ltd., while Bigshare Services Pvt. Ltd. is the registrar to the issue. Market-Hub Stock Broking Pvt. Ltd. is the market maker. Beeline Broking Ltd. is a syndicate member.

After issuing initial equity shares at par, the company issued further equity shares at a fixed price of Rs. 30 per share between February 2022 and July 2024. It has also issued bonus shares in the ratio of 4 for 1 in March 2025. The average cost of acquisition of shares by the promoters is Rs. 1.24, Rs. 2.67, Rs. 3.37, Rs. 4.26, Rs. 5.50, and Rs. 5.78 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 5.00 cr. will stand enhanced to Rs. 6.86 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 48.02 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 13.90 cr. / Rs. 0.19 cr. (FY23), Rs. 17.88 cr. / Rs. 0.80 cr. (FY24), Rs. 24.64 cr. / Rs. 3.10 cr. (FY25). Quantum jump in its net profit for FY25 raise eyebrows and concern over its sustainability. Such performance in pre-IPO year appears to be a window dressing to fetch fancy valuations.

For the last three fiscals, the company has reported an average EPS of Rs. 5.18, and an average RoNW of 40.65%. The issue is priced at a P/BV of 5.03 based on its NAV of Rs. 13.93 (actual) as of March 31, 2025, and at a P/BV of 2.40 based on its post-IPO NAV of Rs. 29.23 per share (at the upper cap).

If we attribute its FY25 super annualized earnings on post-IPO expanded equity base, then the asking price is at a P/E of 15.49, and based on its FY24 earnings, the P/E stands at 60.34. Thus, the issue appears aggressively priced.

The company has posted PAT margins of 1.40% (FY23), 4.47% (FY24), 12.62% (FY25), and RoCE Margins of 12.77%, 21.70%, 45.66%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORDS:
This is the 26th mandate from Interactive Financial in the last four fiscals (including the ongoing one). Out of the last 13 listings, 5 opened at discount, and the rest with premium ranging from 1.10% to 90% on the date of listing. It has a poor track record so far.