Sudarshan Pharma IPO Opens Today, Should you Invest?

Sudarshan Pharma IPO plans to raise INR 25.80 crore by offering 34,40,000 shares. The company have rich experience in Pharma sector and have established goodwill for quality products. However, the valuations seems to be bit stretched, so can be invested for long term.

Company Business Overview

The company had launched multiple products that ranges in pharma formulation such as Jivan Kit, Setdown, Pulmo relief, Fix Pollen, Flupimac etc. and many more .

Sudarshan Pharma is also supplier of generic pharmaceutical formulation, like Make to order, in order to supply in bulk to the hospital, Corporate’s Health Centre, Municipality and exports

The company’s two promoters have a combined experience of more than 25 years in the Special Chemical, Bulk drug and Pharmaceutical Industry.

The company’s top clients include Cipla, Larsen & Toubro (Aeronautical division), Berger, Gujarat Insecticides, Huntsman, Navin Flourine Industries, Insecticides India Ltd, Isia (Asia) Agrochemicals Pvt Ltd SRF Ltd, Clean Science and Technology Pvt Ltd, Songwon Speciality Chemicals-India Pvt. Ltd etc.

The company has a product pipeline ready for exporting it into the countries like South East Asia, Middle East & North Africa (MENA Region).

To further expand its export business, the company is in the process of applying for 16 formulation registrations in countries like Ghana, Georgia, Cambodia, Myanmar, Nigeria, Kenya, Malaysia & MINA region.

The company intends to develop distributor network & logistic facility in Mumbai, Delhi, Hyderabad and Ahmedabad.

Sudarshan Pharma IPO Details

• The net proceeds will be used for setting up a manufacturing facility for Pharmaceutical Business – INR 12.50 crore, Distribution and Warehousing Centre‘s & Purchasing the Corporate Office – INR 4.50 crore. Working Capital Requirements-INR 5.25 Cr and Offer related expenses- INR 0.75 Cr.
• Issue Open: June 12th, 2019 – June 17th, 2019
• Issue Price: Rs 75 Per Equity Share
• Minimum Investment: INR 1,20,000
• Minimum Order Quantity: 1600 Shares
• Retail Portion: 50%
• Equity Shares Offered (Fresh): 34,40,000
• Equity Shares Prior to the Issue: 95,46,998
• Equity Shares after the Issue: 1,29,86,998
• Listing At: NSE Emerge SME platform
• Listing Date: On or Before 25th June 2019

Should you Invest?

Sudarshan Pharma plans to expand their business by continuing to file product registrations in international markets. In FY18, the company posted the revenue of INR 8976 lakhs & in FY 19 the company delivered the topline of INR 14001 lakhs. The company’s profit margin in FY 18 was 0.8% which improved to 1.7% in FY 19   

 

However, the IPO is asking a P/E multiple of 41x based on FY19 financials which reflects very stretched valuation. Further, it is also high compared to its peers like Torrent  Pharma (P/E is 38x), Alembic (P/E is 24.10x), etc. The investors may “subscribe” to Sudarshan Pharma IPO for long term gains.