Introduction:
The Initial Public Offering (IPO) of Valiant Laboratories Limited - a leading pharmaceutical ingredient manufacturing company – hit the D-street on Wednesday, 27 September 2023. The company aims to raise Rs. 140 per equity share at its upper price band of Rs. 153 crore from public investors. The IPO proceeds shall be used to set up a new manufacturing facility in Gujarat and fund the working capital requirements of VASPL – a wholly-owned subsidiary.
Continue reading to find out the essential details concerning Valiant Laboratories IPO, including the issuing company’s financials, strengths, weaknesses, price band, lot size, etc., and subsequently decide if you should invest in it or not.
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About Valiant Laboratories Limited:
Valiant Laboratories Limited is engaged in manufacturing pharmaceutical ingredients with an exclusive focus on paracetamol. The company supplies bulk drugs and Active Pharmaceutical Ingredients (APIs) to finished dosage firms. It was incorporated in 1980 with the head office in Mulund Goregaon, Mumbai, Maharashtra.
The company’s lone manufacturing unit is in Palghar, Maharashtra, spanning an area of 2,000 square meters and having a total installed capacity of 9,000 Metric Tonnes Per Annum (MTPA). It also has a wholly-owned subsidiary, Valiant Advanced Sciences Private Limited (VASPL), which deals in specialty chemicals and related products.
Key Strengths of Valiant Laboratories Ltd.
The key strengths of the company as per its Red Herring Prospectus (RHP) include:
- It has received an ISO 9001:2015 certification for good manufacturing practices
- The strategic location of the manufacturing facility near the Nhava Sheva Port helps in the seamless transportation of products
- Strong financial performances with a three-year average return on capital employed (ROCE) of 43.1%
- Boasts strong promoters and a highly experienced management team with an excellent track record
- The success of the company can reduce the dependence on the import of raw materials required in the pharmaceutical industry
Key Risks or Weaknesses Highlighted
Below are the key risks or weaknesses associated with Valiant Laboratories Ltd.:
- A significant portion of the revenue comes from only a few clients
- The absence of long-term agreements with vendors may hurt the supply of raw materials
- Obligated to fulfill strict quality requirements and guidelines of the government
- A sole focus on paracetamol manufacturing can hurt the company if the product demand reduces
- The supply of raw materials comes primarily from foreign vendors, making the company prone to the risks associated with currency exchange rate fluctuations
- Uncertainties in the healthcare industry can hurt the business
- Operates in a highly competitive industry
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Financial Snapshot of the Company
The table below portrays the financials of Valiant Laboratories Ltd. for the last three fiscals. The details are as per the company’s RHP dated 18 September 2023 on the SEBI website:
| Particulars |
As of and for FY Ending March 31 |
| 2023 |
2022 |
2021 |
| Equity Share Capital |
33 |
16 |
11 |
| Net Worth |
100 |
71 |
89 |
| Total Borrowings |
59 |
61 |
0 |
| Revenue From Operations |
334 |
292 |
182 |
| EBITDA |
35 |
42 |
50 |
| Profit After Tax |
29 |
27 |
31 |
| Earnings Per Share (Diluted) |
9 |
10 |
11 |
| Net Asset Value (In Rs/share) |
31 |
44 |
84 |
| Return on Capital Employed (%) |
23 |
36 |
71 |
*Amount in Rs. Crores
As you can see, the company’s revenues have grown consistently from Rs. 182 crores to Rs. 334 crores between FY21 and FY23. However, net profits have declined from Rs. 31 crores to Rs. 29 crores during the same period. The company's net worth has risen by almost 40% from Rs. 71 crore to Rs. 100 crore in the last year.
Details of the IPO
Valiant Laboratories Ltd. aims to raise up to Rs. 153 crore through its IPO, which comprises entirely of fresh issuance of 1.09 crore equity shares. 50% of the issue has been reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and the remaining 35% for retail investors.
The IPO opens for public subscription on Wednesday, 27 September 2023, and closes on Tuesday, 3 October. Retail investors can bid for a minimum of 105 shares (one lot) and in multiples thereof in the price band of Rs. 133 to Rs. 144 per share.
Refer to the table below for more IPO details:
| IPO Date |
27 Sep to 3 Oct 2023 |
| Listing Date |
09-Oct-23 |
| Face Value |
Rs. 10 per share |
| Price Band |
Rs. 133 to Rs. 144 per share |
| Lot Size |
105 shares |
| Total Issue Size |
Rs. 153 crores |
| Fresh Issue |
Rs. 153 crores |
| Issue Type |
Book-built IPO |
| Listing At |
NSE, BSE |
The final words
With attractive financials and a fair valuation, Valiant Laboratories IPO seems good for investment. However, as an investor, you must consider various factors, including the issuing company’s fundamentals, strengths, risks, promoters, and the prevailing market conditions, before making your investment decisions.
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