IPO Analysis

Date Heading Details
20-Jun-2019   12:42 Hrs IST Earum Pharmaceuticals coming with an IPO to raise up to Rs 6.65 crore <p align="justify"><strong>Earum Pharmaceuticals</strong><br></p><ul><li><div align="justify">Earum Pharmaceuticals is coming out with an initial public offering (IPO) of 18,48,000 Equity Shares of face value of Rs 36.00 each for cash at a fixed price of Rs 10 per equity share.<br></div></li><li><div align="justify">The issue will open on June 21, 2019 and will close on June 26, 2019.<br></div></li><li><div align="justify">The shares will be listed on BSE SME platform.<br></div></li><li><div align="justify">The share is priced 3.60 times higher to its face value of Rs 10.<br></div></li><li><div align="justify">Book running lead manager to the issue is Hem Securities<br></div></li><li><div align="justify">Compliance Officer for the issue is Parsotam Kantilal Purohit.<br></div></li></ul><p align="justify"><strong>Profile of the company</strong></p><p align="justify">Earum Pharmaceuticals was originally incorporated as 'Earum Pharmaceuticals Private Limited' on July 26, 2012 vide Registration no. 071299 under the provisions of the Companies Act, 1956 with the Registrar of Companies, Gujarat, Dadra and Nagar Havelli. Further, pursuant to Special Resolution passed by the shareholders at the Extra Ordinary General Meeting held on January 10, 2019, the company was converted into a Public Limited Company and consequently the name of the Company was changed from 'Earum Pharmaceuticals Private Limited' to 'Earum Pharmaceuticals Limited' vide a fresh Certificate of Incorporation dated January 23, 2019 issued by the Registrar of Companies, Ahmedabad. The Corporate Identification Number of the Company post conversion.<br></p><p align="justify">The Company is engaged in the pharmaceutical business involving marketing, trading and distribution of wide range of pharmaceutical formulation products such as anti-biotic drugs, anti-malarial drugs, anti-allergic &amp; anti cold drugs, analgesic/ anti-pyretic &amp; anti inflammatory drugs, dermatology products, cerebral activator drugs, neurological drugs, gastro intestinal drugs, steroids, gynecology drugs, calcium, multivitamins, anti-oxidants and injections.&nbsp; Apart from pharmaceutical formulation products, it also deals in trading of active pharmaceutical ingredients (API's) such as Levofloxacin Hemihdrate IP &nbsp;Albendazol IP, Amoxicillin Trihydrate IP etc.</p><p align="justify"><strong>Proceed is being used for:</strong><br></p><ul><li><div align="justify">Meeting working capital requirements;<br></div></li><li><div align="justify">General Corporate purposes; and<br></div></li><li><div align="justify">Meeting&nbsp;issue expenses.<br></div></li></ul><p align="justify"><strong>Industry overview</strong><br></p><p align="justify">The Indian pharmaceutical industry has contributed immensely not just to Indian but to global healthcare outcomes. India continues to play a material role in manufacturing various critical, high - quality and low - cost medicines for Indian and global markets. It supplies 50 to 60% of global demand for many vaccines (including ARVs), 40% of generics consumed in the US and 25% of all the medicines dispensed in the UK. Over the last 5 years, 35 to 38% of total ANDAs approved (including 25 to 30 percent of total injectable ANDAs) have been filed from Indian sites. <br></p><p align="justify">Generic penetration in high value healthcare markets (e.g.,US) has grown significantly, with India supplying 20+ percent of the generics demand in major geographies. India's strong position as a pharma supplier rests on its ability to provide high quality medicines backed by strong innovation capabilities and a structural cost advantage. The cost of manufacturing formulations in India remains 30‐40 percent lower than other comparative manufacturing hubs such as China and Eastern Europe, notwithstanding low productivity levels. This is driven by lower labour costs compared to other geographies. Despite inflationary trends, India's labour cost advantage will sustain in the medium to long term, especially if Indian companies can improve productivity through operational excellence and digital initiatives. </p><p align="justify"><strong>Pros and strengths</strong><br></p><p align="justify"><strong>Diversified Product Portfolio:</strong> The Company has diverse product portfolio across various segments to fulfill customer's requirements. Its offerings includes wide range of finished formulations. The company supply products on the basis of trends, needs and requirements in the market. Its product range in formulations allows its existing customers to source majority of their product requirements from the company and also enables it to expand the business from existing customers as well as address a larger base of potential new customers.</p><p align="justify"><strong>Experienced Promoter and Management team:</strong> The Promoter of the company, Bhumishth Narendrabhai Patel has significant industry experience and has been instrumental in the consistent growth of the company's performance. Patel has an overall experience of over 12 years in various segments of pharmaceutical business. Further the Company is managed by a team of experienced personnel. The team comprises of personnel having technical, operational and business development experience. The company's management team's experience and their understanding of the pharmaceutical business will enable it to continue to take advantage of both current and future market opportunities.</p><p align="justify"><strong>Quality assurance:</strong> Providing quality is an ongoing process of the company to build and sustaining relationships. The strength lies in understanding the requirements of the customer and the company's execution capabilities. This has enabled the company to get repeated orders from its existing customers and attract new customers.</p><p align="justify"></p><p align="justify"><strong>Risks and concerns</strong><br></p><p align="justify"><strong>Highly competitive market:</strong> The Company's products face competition from products commercialized or under development by competitors in all of its product portfolios. The company compete with local companies, multi-national corporations and companies from the rest of world. If its competitors gain significant market share at its expense, its business, results of operations and financial condition could be adversely affected. Many of its competitors may have greater financial, manufacturing, research and development, marketing and other resources, more experience in obtaining regulatory approvals, greater geographic reach, broader product ranges and stronger sales forces.</p><p align="justify"><strong>Dependent on few clients:</strong> Significant portion of its revenue is generated from few of its key clients. During the nine months period ended December 2018 and fiscal year ended 2018, the company has derived 95.51% and 76.64% of its total revenue (including taxes) respectively from its top five clients. Any loss of such key clients, significant reduction in the demand for its services from such clients or deterioration in their financial condition may adversely affect its business, financial condition, result of operations and cash flows.</p><p align="justify"><strong>Capital Intensive:</strong> The company requires significant amount of working capital and major portion of its working capital is utilized towards debtors, and inventories. As on December 31, 2018, the company have been sanctioned working capital limit of Rs 575 lakhs from State Bank of India. Its growing scale and expansion, if any, may result in increase in the quantum of current assets. The company's inability to maintain sufficient cash flow, credit facility and other sourcing of funding, in a timely manner, or at all, to meet the requirement of working capital or pay out debts, could adversely affect its financial condition and result of its operations.<br></p><p align="justify"><strong>Outlook<br></strong></p><p align="justify">Earum Pharmaceuticals is engaged in the pharmaceutical business involving marketing, trading and distribution of wide range of pharmaceutical formulation products such as anti-biotic drugs, anti-malarial drugs, anti-allergic &amp; anti cold drugs, analgesic/ anti-pyretic &amp; anti inflammatory drugs, dermatology products, cerebral activator drugs, neurological drugs, gastro intestinal drugs, steroids, gynecology drugs, calcium, multivitamins, anti-oxidants and injections.&nbsp; The company is focused on dealing in the products which meets with the requisite quality standards as per the applicable regulatory norms. Providing the desired and good quality products help the company in enhancing it's image and maintaining long term relationships with customers. On the concern side, the company has experienced negative cash inflows in some ears in the past. Any negative cash flow in the future may affect its liquidity and financial condition. </p><p align="justify">The company is coming out with an IPO of 18,48,000 equity shares of Rs 10 each at a fixed price of Rs 36.00 per equity share to mobilize Rs 6.65 crore. On the performance front, as per Restated Financial statements for the nine (9) months period ended December 31, 2018 and fiscal 2018, 2017 and 2016, its total revenues were Rs 3450.35 lakhs, Rs 3584.65 lakhs, Rs 2369.27 lakhs, and Rs 1863.00 lakhs, respectively. The Profit after Tax for the similar period mentioned above was Rs 86.51 lakhs, Rs 85.65 lakhs, Rs 15.98 lakhs, and Rs 9.76 lakhs, respectively. </p><p align="justify">The company maintains good relationship with its suppliers and customers which is the most important factor to keep the growth of the company. Its dedicated and focused approach and efficient and timely delivery of products has helped to build strong relationships over number of years. It bags and place repetitive order with its customers as well as with its suppliers respectively. For the company, establishing strong, mutually beneficial long-term relationships and strategic supplier relationship management are critical steps in improving performance across the supply chain, generating greater cost efficiency and enabling the business to grow and to develop.</p>
18-Jun-2019   14:34 Hrs IST Parshva Enterprises coming with an IPO to raise up to Rs 3.65 crore <p align="justify"><strong>Parshva Enterprises</strong><ul><li><div align="justify">Parshva Enterprises is coming out with an initial public offering (IPO) of 8,10,000 equity shares of face value of Rs 10 each&nbsp; at a fixed price of Rs 45 per equity share.</div></li><li><div align="justify">The issue will open on June 19, 2019 and will close on June 21, 2019.</div></li><li><div align="justify">The shares will be listed on SME Platform of BSE.</div></li><li><div align="justify">The share is priced 4.50 times higher to its face value of Rs 10.</div></li><li><div align="justify">Book running lead manager to the issue is Inventure Merchant Banker Services.</div></li><li><div align="justify">Compliance Officer for the issue is Sneha Y. Shah. </div></li></ul><p align="justify"><strong>Profile of the company</strong><p align="justify">Parshva Enterprises was originally incorporated as a public limited company under the Companies Act, 2013 pursuant to a certificate of incorporation issued by the Registrar of Companies, dated July 27, 2017 with the name ‘Parshva Enterprises Limited'.<p align="justify">Parshva Enterprises is engaged in the wholesale supply and trading of precious stones, primarily cut and polished diamonds. The company also deals in gold jewellery. It sells its products to its clients domestically. It is located in Mumbai, which is an established jewellery market which gives the company an added advantage in terms of procurement. The company also deals in variety of diamonds which include both rough and polished diamonds. It buys and sells diamonds in local markets as per the demand. It also sells diamonds of multiple categories based on different shapes, size, cut and fancy color. Apart from this, the company also invests in real estate properties in Mumbai for the purpose of selling them for trading gains. In real estate business the company is focused on Maharashtra and Gujarat. The company invests in both residential and commercial properties based on its own study of the market. The company is also involved in real estate broking. It deals with range of properties and apartments of varying sizes, with a focus on the middle and higher end of the market.<p align="justify"><strong>Proceed is being used for :</strong><ul><li><div align="justify">Meeting Additional Working Capital Requirements.</div></li><li><div align="justify">Meeting&nbsp;Issue Expenses.</div></li></ul><p align="justify"><strong>Industry Overview</strong><p align="justify">The Gems and Jewellery sector plays a significant role in the Indian economy, contributing around 7 per cent of the country's GDP and 15 per cent to India's total merchandise exports. It also employs over 4.64 million workers and is expected to employ 8.23 million by 2022. One of the fastest growing sectors, it is extremely export oriented and labor intensive. Based on its potential for growth and value addition, the Government of India has declared the Gems and Jewellery sector as a focus area for export promotion. The Government has recently undertaken various measures to promote investments and to upgrade technology and skills to promote ‘Brand India' in the international market.<p align="justify">India is deemed to be the hub of the global jewellery market because of its low costs and availability of high-skilled labour. India is the world's largest cutting and polishing centre for diamonds, with the cutting and polishing industry being well supported by government policies. Moreover, India exports 75 per cent of the world's polished diamonds, as per statistics from the Gems and Jewellery Export promotion Council (GJEPC). India's Gems and Jewellery sector has been contributing in a big way to the country's foreign exchange earnings (FEEs). The Government of India has viewed the sector as a thrust area for export promotion. The Indian government presently allows 100 per cent Foreign Direct Investment (FDI) in the sector through the automatic route.<p align="justify"><strong>Pros and strengths</strong><p align="justify"><strong>Quality assurance:</strong> The company always believed in the best quality in its sourcing process and products. The company is dedicated towards quality of its products that satisfies need of its customers and quality standards prescribed by them.<p align="justify"><strong>Multiple Products:</strong> The company sells diamonds of multiple categories, different shape, size, cut and fancy color. The company offers various products such as Chains, Rings, Necklace, Pendants, Bracelet, Earrings and other jewellery studded with pearls and precious stones. It trades in multiple jewellery products to cater to the specific needs of its clients.<p align="justify"><strong>Domain expertise:</strong> In a short span, the company has collected a large range of designs of Jewellery for its customers. The company understands the market trends, which enables it to be proactive and to suitably develop product mix for its various customers. The company's wide range of designs and ability to always being abreast of the latest trends helps it to provide more and better choices to its customers.<br><p align="justify"><p align="justify"><strong>Risks and concerns</strong><p align="justify"><strong>Intense competition:</strong> The Indian domestic gems and jewellery industry is highly fragmented and dominated by the unorganized sector, from which the organized retail jewellery sector faces intense competition. The unorganized sector offers their products at highly competitive prices which may not be matched by the company when it expands its retail operations in the domestic market, which may affect its volume of sales and growth prospects.<p align="justify"><strong>Significant amount of working capital:</strong> Its business requires high amount of working capital to finance operational expenses before payments are received from client. A significant portion of its working capital is utilized towards trade receivables. Inability to meet working capital requirements may have an adverse effect on its results of operations.<p align="justify"><strong>Changes in technology:</strong> The markets for its services are characterized by rapidly changing technology, evolving industry standards and norms and new service introductions. Adaptability is one of the key attributes for success in the industry. The company's results of operations and financial condition depend on its ability to develop and introduce new products and services, as well as its ability to modify and upgrade its existing products Its failure to successfully adopt such technologies in a cost effective and a timely manner could increase the costs and lead the company being less competitive in terms of its prices or quality of services it provides.<br><p align="justify"><strong>Outlook </strong><p align="justify">Parshva Enterprises is engaged in the wholesale supply and trading of precious stones, primarily cut and polished diamonds. The company also deals in gold jewellery. It sells its products to its clients domestically. It is located in Mumbai, which is an established jewellery market which gives the company an added advantage in terms of procurement. Apart from this, the company also invests in real estate properties in Mumbai for the purpose of selling them for trading gains. In real estate business the company is focused on Maharashtra and Gujarat. The company invests in both residential and commercial properties based on its own study of the market. The company is also involved in real estate broking. It deals with range of properties and apartments of varying sizes, with a focus on the middle and higher end of the market. The Company is managed by its Promoter along with his team having knowledge of core aspects of its Business. The company's Promoters are well assisted by its dedicated Key Managerial Persons. On the concern side, the company's substantial portion of revenues has been dependent upon few clients. The loss of any one or more of its major clients would have a material adverse effect on its business operations and profitability<p align="justify">The company is coming out with a maiden IPO of 8,10,000 equity shares of Rs 10 each&nbsp; at a fixed price of Rs 45 per equity share to mobilize Rs 3.65 crore. On the performance front, the company's revenue from operations is Rs 709.22 Lakhs. Out of the revenue from operations Rs 5.00 lakhs is net revenue from real estate business and entire balance revenue is from gems and jewellery business. The company entered into real estate segment from FY 2019. It had other income of Rs 4.11 Lakhs which consisted of interest received. Total income for the FY 2019 was Rs 713.32 Lakhs. Meanwhile, the PBIDT stood at Rs 45.44 Lakhs for the year ended March 31, 2019 with the PBIDT margin of 6.37%. The company's PBT of Rs 40.58 Lakhs and PBT margin stood at 5.69%. The company has recorded Net Profit of Rs 30.04 Lakhs with Net Profit Margin of 4.21%. The company intends to grow the business continuously by adding new customers. To remain aggressive and capitalize a good market share, the company&nbsp;offers competitive prices to its customers. This helps the company to sustain the competition and claim a position of strength in the marketplace.</p>
17-Jun-2019   16:16 Hrs IST Anand Rayons coming with an IPO to raise Rs 12.66 crore
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