IPO: Eris Lifesciences
Eris Lifesciences founded by Mr Amit Bakshi and team in 2007 is one of the fastest growing companies within the chronic and acute categories of the Indian Branded Formulations market such as: cardiovascular; anti–diabetes; vitamins; gastroenterology and gynaecology. Company focus on developing, manufacturing and marketing products which are linked to lifestyle related disorders that are chronic in nature and are treated by super specialist and specialist doctors. Chronic category contributes to over 64.2% of our revenues as compared to 33.4% contribution to the IPM.
Issue Price: Rs 600 - Rs 603 per share
Market Lot: 24 Shares
Purpose of issue: To get the benefits of listing the equity shares on the stock exchange and existing shareholders and promoters will sell their stake through this OFS. Also, PE firm ChrysCapital (77% of OFS) selling its stake.
The offer: The Offer is of up to 28,87,5,000 Equity Shares of face value of Re. 1 each, which represent 21% of the post issue paid-up share capital.
Book Running Lead Managers: Axis Capital Limited, Citigroup Global Markets India Private Limited, and Credit Suisse Securities (India) Private Limited.
Size of the issue: Rs. 1,741 crore at the upper end.
Issue Open: Jun 16, 2017 - Jun 20, 2017
Listing of the issue: The shares will be listed on the BSE and NSE
Looking at company’s historical performance, company has delivered revenue growth of 17% CAGR during FY13-17, during same period company’s PAT has grown at 43% CAGR. Furthermore, in FY17 company made two acquisition (Kinedex Healthcare and of Amay Pharma’s 40 brands and Aprica Pharma) which partly aided company’s growth.
As on 31 March, 17, company’s net worth stands at Rs. 540 crore and it enjoys a debt free status. Surplus cash and equivalents are Rs. 261 crore.
Moreover, it enjoys tax exemption (under Income Tax Act, which will continue post GST) till FY24 on its sole manufacturing facility at Guwahati, Assam, which accounts for 78% of sales. Balance 22% of sales is outsourced to contract manufacturers.
On the valuation front, company’s one year forward P/E stands at 28x, which looks comparatively high. However, considering the company’s cash rich status, sound fundamentals and most importantly, the fact that the company does not have exposure to exports and is not hindered by US FDA regulatory issues has make this IPO an attractive pick.
Besides, Eris Lifesciences’ 49% RoCE and 45% RoE is as an icing on cake. The company is primarily pursuing the Indian pharma market, which is highly lucrative. Hence, investor can subscribe to this issue.
The shares of Eris are expected to hit secondary market on 29th June.