Beta Drugs NSE SME IPO review (Apply)

Beta Drugs Limited (BDL) is the part of Adley Group which has decades of experience in Pharma Industry. At BETA DRUGS, Oncology being one of the fastest growing therapy segments, sharp focus in the area is indeed a step in the right direction. BDL poised to be in the leadership position in Oncology and want to thrive in the segment through better technology in-licensing and innovations. BDL is a custom manufacturing and dedicated facility. Company’s Oncology unit dedicated to manufacturing of its leading anticancer cyto-toxics. It has achieved excellence in Formulations’ and Lypholization technology and strength in capacity building in sterile liquid ampule/vial, dry powder facilities and tablets and capsules unit.

BDL’s future focus is on self reliance in Biotech and Bio-similar segments, which are already initiated with the major business tie-ups with Reliance Life Sciences. Its first major launch is Pegfilgrastim (ADFILL), which is required in majority of cancer patients. Further, with the launch series of biosimilars like Rituximab, Trastuzumab, Bevacizumab , the group mulls crossing turnover of USD 2000 million by 2023. To achieve those targets, it is putting dedicated effort to start its own biotech. / Biosimilar productions and exports. BDL’s client list includes giants like Torrent Pharma, Zydus Group, Biochem, Alkem, Hetro Healthcare, RPG Life Sciences, Panacea Drugs etc.

To part finance purchase of new plants and machinery and up gradation of existing plants/machinery, obtaining of European Union GMP registration and pharmaceutical inspections, civil construction for existing manufacturing plants, general corpus fund needs, BDL is coming out with a maiden IPO of 2296000 equity share of Rs. 10 each with a fixed price of Rs. 85 per share to mobilize Rs. 19.52 crore. Issue opens for subscription on 29.09.17 and will close on 04.10.17. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.54% of the post issue paid up capital of the company. It raised equity at par from incorporation till November 2014. Thereaftrer it issued bonus shares in the ratio of 4.9 shares for every 1 share held in July 2017 and 394500 fresh shares at a fixed price of Rs. 74 per share in August 2017. Post issue, its current paid up equity capital of Rs. 6.34 crore will stand enhanced to Rs. 8.65 crore.

On performance front, BDL has posted turnover/net profits of Rs. 1.38 cr. / Rs. 0.02 cr. (FY14), Rs. 0.26 cr. / Rs. 0.11 cr. (FY15), Rs. 26.39 cr. / Rs. 1.13 cr. (FY16) and Rs. 41.68 cr. / Rs. 5.18 cr. (FY17). Thus for last two fiscals it has shown improving performance. It has reported an average EPS of Rs. 4.95 and average RoNW of 50.48% on an equity base of Rs. 1.01 crore. Issue is priced at a P/BV of around 5.24, If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 14 plus against peers trading in the range of 22 to 46 P/Es. Thus issue is priced reasonably.

On merchant banker’s front, this is the 52nd mandate from its stable. Out of last 10 recent listings, 1 opened at discount, 1 at par and the rest with 1 to 18% premium on IPO price.

Conclusion: Considering reasonable pricing and prospects of healthcare industry going forward, investment may be considered for short to long term.