Vijaypd Ceutical NSE SME IPO review

•    The company is engaged in the business of distribution and supply of healthcare, personal care and other FMCG products.
•    While marking growth for the reported period in its earnings, boosted performance for FY25 is a bit surprising.
•    It is operating in a highly competitive and fragmented segment.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Vijaypd Ceutical Ltd. (VCL) is engaged in the business of distribution and supply within the pharmaceutical and consumer goods sectors, offering a comprehensive range of services. Its roles include being representatives, dealers, agents, stockists, suppliers, traders, and packers. The company offers a wide range of products serving both the pharmaceutical and wellness industries, as well as the fastmoving consumer goods (FMCG) market. Its pharmaceutical and wellness product range includes medicines such as injections, tablets, capsules, ointments, suppositories, ophthalmic preparations, and liquid oral formulations. The company also supplies vitamins, hormones, enzymes, wellness tonics, serums, and diagnostic test kits. In the FMCG segment, it provides personal care and toiletry products, including soaps, sanitizers, and baby care items. Additionally, it deals in ayurvedic products, cosmetics, food products, dental products, and crude drugs.

A pharmaceutical supply chain consists of various stages, ranging from manufacturing to distribution and the delivery of medicines and vaccines to consumers. This supply chain encompasses several processes such as drug distribution, inventory management, pharmaceutical logistics, and overall supply chain management. In addition to these processes, it involves multiple entities, including manufacturers, suppliers, distributors, logistics partners, shippers and pharmaceutical retailers. The company as a distributor of pharmaceutical products, known for leveraging advanced technology to deliver comprehensive healthcare solutions to pharmacies, nursing homes, and clinics across Western Suburban Mumbai, South Mumbai, Ratnagiri, Aurangabad and Akola. 

The company operates three distribution warehouses located across Mumbai, ensuring timely and efficient deliveries. As of March 31, 2025, its customer base includes over 2,109 pharmacies, clinics, and nursing homes across four districts, covering 20 locations. Our distribution network is supported by connecting with more than 170 healthcare product manufacturers, granting it access to a diverse range of over 19,000 product stock-keeping units (“SKUs”). This extensive product portfolio enables it to meet the evolving needs of customers while maintaining the standards of quality and reliability in pharmaceutical supply.

VCL provides quality products from trusted manufacturers and suppliers. Its diverse portfolio allows it to cater to a broad range of needs across the healthcare, wellness, and consumer goods sectors. The company adds value to healthcare product manufacturers by providing them with greater reach and accessibility to pharmacies, hospitals, and clinics. Its robust last mile delivery infrastructure and good relationships with healthcare providers enable manufacturers to make their products available to a wide range of customers, pharmacies, hospitals, and clinics through its distribution infrastructures. As of March 31, 2025, it had 51 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 5500000 equity shares of Rs. 10each at a fixed price of Rs. 35 per share to mobilize Rs. 19.25 cr. The IPO opens for subscription on September 29, 2025, and will close on October 01, 2025. The minimum application to be made is for 8000 shares and in multiple of 4000 shares thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 28.16% of post-IPO paid-up equity capital of the company. The company is spending Rs.2.58 cr. for this IPO process, and from the net proceeds of the issue, the company will utilize Rs. 10.83 cr. for capex on construction of new Pharma API/Intermediates and chemicals plant with related plant, Rs. 5.10 cr. for repayment/prepayment of certain borrowings, and Rs. 0.74 cr. for general corporate purposes.

The IPO is solely lead managed by Smart Horizon Capital Advisors Pvt. Ltd., while KFin Technologies Ltd., is the registrar to the issue. SHRENI group’s Shreni Shares Ltd., is the market maker. 

After issuing initial equity shares at par value, the company issued further equity shares at a fixed price of Rs. 44.38 per share between June-July 2024. It has also issued bonus shares in the ratio of 1 for 1 in October 2024. The average cost of acquisition of shares by the promoters is Rs. 2.45, Rs. 18.69, Rs. 19.86, Rs. 20.30, Rs, 25.79, and Rs. 28.18 per share.

Post-IPO, company’s current paid-up equity capital of Rs. 14.03 cr. will stand enhanced to Rs. 19.53 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 68.35 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total Income/Net Profit of Rs. 50.59 cr. / Rs. 0.18 cr. (FY23), Rs. 54.34 cr. / Rs. 1.65 cr. (FY24), and Rs. 107.59 cr. / Rs. 4.80 cr. (FY25). The company marked growth I its top and bottom lines for the reported period. However, boosted top and bottom lines for FY25 raise surprises and concern over its sustainability.

For the last three fiscals, the company has reported an average EPS of Rs. 4.82, and an average RoNW of 63.08%. The issue is priced at a P/BV of 1.36 based on its NAV of Rs. 25.78 as of March 31, 2025, and at a P/BV of 1.40 based on its post-IPO NAV of Rs. 25.01 per share.

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 14.23, and based on its FY24 earnings, the P/E stands at 41.18. Thus, based on its recent financial data, the issue appears aggressively priced.

The company has posted PAT margins of 0.37% (FY23), 3.04% (FY24), 4.49% (FY25), and RoCE Margins of 8.90%, 14.61%, 17.30%, 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 offer document, the company has shown Medplus Health, Entero Healthcare, as its listed peers. They are currently trading at a P/E of around 52.9 and 46.0 (as of September 26, 2025).  However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORDS:
This is the 11th mandate from Smart Horizon in the last two fiscals (including the ongoing one). Out of the last 10 listings, 1 opened at discount, 1 at par, and the rest with premium ranging from 0.81% to 90% on the date of listing.