Bajaj Healthcare BSE SME IPO review (Apply)

Bajaj Healthcare Ltd (BHL) is a pharmaceutical company with manufacturing and marketing capabilities in Active Pharmaceutical Ingredients (APIs), Intermediates and Finished Dosage Formulations (FDFs) with focus on Vitamins, Amino Acids, Anti-Convulsants and Finished Dosage Forms (FDFs) catering to various therapeutic segments.

Company’s present product portfolio consists of various APIs in the therapeutic categories of Neutraceutical (Amino Acids), Vitamins, Anti-Convulsants, Bactericidal & Bacteriostatic, Diuretic & Vasodilator, Mineral & Nutritional supplements, Bronchodilater / Anti-asthmatic and Nootropics. Its Formulations unit manufactures tablets, capsules and sachets for its own brands as well as under Loan License (job work) for other pharmaceutical companies. Currently, BHL manufactures formulations for GlaxoSmithKline Pharmaceuticals Limited (GSK) and USV Limited (USV) on a Loan License basis. The formulations manufactured for own brands are manufactured and marketed under a separate division of Bajaj Medicare and the company also have marketing tie-up with TTK Healthcare Limited. The FDFs manufactured by it cover various therapeutic segments like Antibiotics, Anti-Arrhythmia, Anti-Convulsants, Anti-Diabetes, Anti-Platelets, NSAIDs, Vitamins & its Derivatives, Anti-Hypertensive, Anti-Bacterial, Anti-Malarial, Cholinesterase Inhibitors, etc. Presently BHL is supplying APIs and FDFs both domestically and exporting to various countries in regions like, Europe, USA, Australia, Africa, South America, etc.

To part finance its debt repayment needs and to provide exit route to existing stakeholders, the company is coming out with a maiden IPO of 1817600 equity share of Rs. 10 each at a fixed price of Rs. 170 per share to mobilize Rs. 30.90 crore. The offer consists of 149600 primary issue and 1668000 secondary issue (i.e. offer for sale). Issue opens for subscription on 27.04.16 and will close on 02.05.16. Minimum application is to be made for 800 shares and in multiples thereon, thereafter. Issue is solely managed by Aryaman Financial Services Ltd and Sharex Dynamic (India) Pvt Ltd is the registrar to the issue. After initial equity contribution at par, it issued bonus shares in the ratio of 19 for 1 in January 2009 and in the ratio of 2 for 1 in January 2016. In October 2009 it issued equity at a price of Rs. 280 per share. Post IPO its current paid up equity capital of Rs. 6.75 crore will rise to Rs. 6.90 crore. Post allotment shares will be listed on BSE SME.

On performance front, the company has posted loss of Rs. 1.06 crore on a turnover of Rs. 170.90 for FY 13. Thereafter for FY 14 and FY 15 it has reported turnover and net profit of Rs. 205.01 cr. / Rs. 1.97 cr. and Rs. 218.38 cr. / Rs. 7.51 cr. respectively. For nine months ended 31.12.15 it has posted net profit of Rs. 6.45 crore on a turnover of Rs. 172.52 crore. It we attribute latest earnings on annualized basis on fully diluted equity post IPO then asking price is at a P/E of around 14 that sounds reasonable.

However, merchant banker has poor track record for its past mandates.