Valiant Laboratories IPO Review: Valiant Laboratories is coming up with the  IPO which is set to be listed on the NSE and  BSE. The IPO will be open for subscription on 27th September 2023, and closes on 3rd October 2023.

This article will provide a comprehensive review of the IPO, including an in-depth analysis of the company’s financials,  as well as the strengths and weaknesses of Valiant Laboratories. Keep reading  for more details!

Valiant Laboratories IPO Review – About The Company

Valiant Laboratories was Established in 1980, which specializes in the manufacturing of Active Pharmaceutical Ingredients (APIs) and Bulk Drugs, with a primary focus on Paracetamol. Paracetamol is a globally recognized analgesic, recommended by the World Health Organization (WHO) as the first-line therapy for various pain conditions such as headaches, muscle aches, arthritis, backaches, toothaches, as well as for cold and fever.

The company produces Paracetamol in different pharmacopeia grades such as IP/BP/EP/USP and forms including powder, fine powder, dense, and free-flowing to cater to diverse customer requirements.

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It operates from a single manufacturing facility in Maharashtra, the company has an impressive installed capacity of 9,000 MT per annum.

In terms of revenue, 99.35% is generated from the sale of manufactured products, while the remaining 0.65% comes from other income.

Valiant Laboratories IPO Review – Industry Overview

India’s pharmaceutical API industry, ranked third globally in volume behind China and Italy, contributes to 20% of the global supply of generic drugs. Approximately 35% of APIs and intermediaries produced in India are exported, while the rest are sold domestically, including captive consumption by large formulation players. However, the industry still relies on imports for specific products, with a high dependence on Chinese imports.

The Indian government has allocated around Rs 100 billion for the bulk drug industry, including Rs 30 billion for promoting bulk drug parks over the next five years and Rs 69.4 billion towards a production-linked incentive scheme for promoting domestic manufacturing of critical KSMs/Drug Intermediates and APIs.

The paracetamol API industry in India grew from Rs. 22 billion in fiscal 2017 to Rs. 39 billion in fiscal 2023, with an expected CAGR of 5-7% between fiscal 2023 and fiscal 2027. This growth is largely driven by demand from domestic formulation manufacturers and export markets. The overall capacity for paracetamol manufacturing in India is approximately 6,000 metric tonnes per month.

The overall API industry in India grew from Rs. 781 billion in Fiscal 2017 to Rs. 1,179 billion in Fiscal 2022, registering a CAGR of 8.5%. This growth was supported by an increase in formulation manufacturing in India. The API industry is expected to clock a CAGR of 9-11% between fiscal 2022 and fiscal 2027, largely driven by growth in API exports.

Valiant laboratories  – Financial Highlights

Looking at the financial highlights of Valiant Laboratories, the company has demonstrated a positive trajectory in its operational revenue, which increased from ₹182.3 crore in March 2021 to ₹333.9 crore in March 2023. However, the Profit After Tax (PAT) saw a slight decrease, moving from ₹30.5 crore in March 2021 to ₹28.9 crore in March 2023.

The company’s net worth also showed an upward trend, rising from ₹88.5 crore in 2021 to ₹100.4 crore in 2023. On the other hand, the company’s borrowings increased from ₹35 lakhs in March 2021 to ₹39.4 crore in March 2023, leading to a change in the Debt to Equity ratio from 0 in March 2021 to 0.59 in March 2023.

In terms of financial ratios, Valiant Laboratories reported a Return on Equity (ROE) of 33.73% and a Return on Capital Employed (ROCE) of 22.76%

Financial Metrics 

(Source: RHP of the company)

Competitors of Valiant laboratories

The company finds itself in competition across various markets and product types. It stands toe-to-toe with large multinational pharmaceutical corporations as well as smaller, regionally-based competitors. Notable competitors include Granules, Jagsonpal Pharmaceutical Ltd, Alkyl Amines Chemical Limited, and Laxmi Organics Industries Ltd.

Strengths of the company :

  • The company’s Manufacturing facility is strategically located near JNPT Port for efficient import and export, providing a cost and logistical advantage.
  • One of the key strengths of the company is its strategic initiative to reduce dependency on imported raw materials. The company has successfully decreased its reliance on imports of Para Amino Phenol from China and Cambodia from 78.06% in Fiscal 2020 to a mere 11.92% in Fiscal 2023. This significant reduction showcases the company’s ability to adapt and optimize its supply chain operations.
  • Valiant Laboratories has a  portfolio that spans across multiple industries such as pharmaceuticals, agrochemicals, and dyes and pigments. This diversity reduces the company’s reliance on any single industry, demonstrating its adaptability and resilience.
  • The business segment of Valiant Laboratories  focuses on high-margin specialty chemicals with extensive research and development, providing profitability, customer loyalty, and product differentiation.

Weaknesses of the company: 

  • The company is a single product manufacturing company, and any increase in demand for alternative products of paracetamol like ibuprofen and diclofenac could adversely affect its business.
  • Valiant Laboratories has a limited number of suppliers for its raw materials, who are highly concentrated in the western region of India. This makes the company vulnerable to disruptions from its suppliers.
  •  The company is dependent on a few customers for a major part of its revenues. Any inability to maintain its existing customer network could have a negative impact on its sales, business growth prospects.
  •  The company is dependent on its R&D activities for its future success. If the company does not successfully improve its existing products or expand its product portfolio in a timely and cost-effective manner, its business could be adversely affected.
  • Valiant Laboratories is in the process of expanding its operations into new products and lines of business. Any failure to expand into these new areas could adversely affect its sales, financial condition, results of operations, and cash flows.

Valiant Laboratories IPO Review – GMP

As of 25th September 2023 the company’s GMP information is not yet available, we shall update the article once we receive the information

Valiant Laboratories IPO Review – Key IPO Information

IPO Size152.46Cr
Fresh Issue152.46Cr
opening date 27th september 2023
closing date3rd october 2023
face value ₹10 per share
price band₹133-₹140 per share
lot size 105 shares
Minimum lot 1(105 shares)
maximum lot 13 (1365 shares)
Investment amount 14,700
listing date 9th october 2023

Promoters: Shantilal Shivji Vora, Santosh Shantilal Vora and Dhanvallabh Ventures LLP are the promoters of the company 

Book Running Lead Manager: Unistone capital private limited 

Registrar to the Offer: Link Intime India private limited 

The Objective of the Issue:

The company intends to utilize the net proceeds from the issue towards the funding of the following objects:

  • Investment in its wholly-owned subsidiary, Valiant Advanced Sciences Private Limited (VASPL) for part-financing its capital expenditure requirements in relation to the setting up of a manufacturing facility for specialty chemicals at Saykha Industrial Area, Bharuch, Bharuch, Gujarat (Proposed Facility).
  • Investment in VASPL for funding its working capital requirements.
  • General corporate purposes

In Closing

Valiant Laboratories has made commendable strides in reducing its dependency on imported raw materials, demonstrating strategic foresight and adaptability. The company’s manufacturing facilities are strategically located and well-equipped to meet customer requirements.

While the company’s revenue has seen an upward trend, it’s important to note that borrowings have also increased. As Valiant Laboratories continues its journey, these factors will play a crucial role in shaping its future trajectory.

What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.

Written By Niharika Jadhav

By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment decisions.

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