Review By on August 1, 2017
Vaishali Pharma Ltd (VPL) is a pharma company dealing in pharmaceutical formulations, APIs, surgical products, veterinary supplements catering to domestic and export markets. On domestic front it has major trading in APIs while in export markets it does trading and marketing of APIs, formulations, surgical products etc. VPL has applied for 186 registrations in 13 countries for some of its products out of which it has already received approvals for 71 products from 7 countries and expecting remaining approvals in near term. The company has ISO 9001:2015 certification and is Government recognized “One Star export House”.
To part finance its working capital and general corpus fund needs, the company is coming out with a maiden issue of 1976000 equity share of Rs. 10 each via book building route with a price band of Rs. 71 – Rs. 72 to mobile Rs. 14.03 to Rs. 14.23 crore based on lower and upper price bands. Issue opens for subscription on 07.08.17 and will close on 10.08.17. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Post issue, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Pantomath Capital Advisors Pvt Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. VPL has issued most of its equity at par and 1615385 shares for a consideration of Rs. 13 per share in May 2017. It has also issued bonus shares in the ratio of 9 for 1 in March 2010 and 5 for 1 in March 2017. Post issue, its paid up equity capital will stand enhanced from Rs. 4.62 cr. to Rs. 6.59 crore.
On performance front, the company has reported turnover/net profits of Rs. 119.10 cr. / Rs. 0.60 cr. (FY13), Rs. 121.57 cr. / Rs. 0.30 cr. (FY14), Rs. 98.82 cr. / Rs. 0.16 cr. (FY15), Rs. 69.89 cr. / Rs. –(0.03) cr. (FY16) and Rs. 67.11 cr. / Rs. 0.66 cr. (FY17). It has posted declining top line for last five fiscals. It suffered setbacks in bottom lines as well with losses in FY16 and despite lower top line, sudden jump in bottom line for FY17 is a big surprise. Last three fiscal’s average EPS is Rs. 1.16 and Rs. 2.21 for FY 17 on a paid up equity capital of Rs. 3 crore. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 72 and at a P/BV of 5.5 making it a costly bet with greedy pricing. Last three fiscal’s average RoNW is 9.10%. As per RHP the company has no listed peer to compare with.
On merchant banker’s front, this is the 41st mandate from its stable, out of last 10 listings, one opened at par with offer price and nine gave positive opening on the listing day.
Conclusion: Exorbitantly priced issue with declining top lines is a high risk bet, hence no harm in giving it a miss.
Review By on August 1, 2017
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Vaishali Pharma Ltd. offers an early investment opportunity in Vaishali Pharma Ltd.. A stock market investor can buy Vaishali Pharma IPO shares by applying in IPO before Vaishali Pharma Ltd. shares get listed at the stock exchanges. An investor could invest in Vaishali Pharma IPO for short term listing gain or a long term.
Read the Vaishali Pharma IPO recommendations by the leading analyst and leading stock brokers.
Vaishali Pharma IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Vaishali Pharma IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Vaishali Pharma IPO?"
Our recommendation for Vaishali Pharma IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Vaishali Pharma IPO.
The Vaishali Pharma IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Vaishali Pharma IPO allotment status to check.
