There is flood of IPOs now. Valiant Laboratories Limited coming up with Initial Public Offering (IPO), scheduled for subscription from September 27, 2023. Company had strong revenue growth, however, margins are on declining mode. In this article we would provide Valiant Laboratories IPO details, Key IPO Dates, Size, Price Band, Positive Factors, Risk Factors and thorough review and analysis.
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Valiant Laboratories IPO – Key Details
| IPO Opening Date | 27-Sep-23 |
| IPO Closing Date | 03-Oct-23 |
| IPO Listing Date | 09-Oct-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 10 per equity share |
| IPO Price band | Rs 133 to Rs 140 per equity share |
| Lot Size | 105 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 152.46 Crores |
Valiant Laboratories IPO Dates and Timetable
| IPO Opens on | 27-Sep-23 |
| IPO Closes on | 03-Oct-23 |
| Basis of Allotment | 05-Oct-23 |
| Initiation of Refunds | 06-Oct-23 |
| Credit of Shares to Demat | 06-Oct-23 |
| Listing Date | 09-Oct-23 |
| Cut-off time for UPI mandate confirmation | 03-Oct-23 |
About Valiant Laboratories Limited
Valiant Laboratories Limited is the subsidiary of Valiant Organics Limited.
Company is a prominent player in the pharmaceutical ingredient manufacturing industry, has carved its niche with a strong focus on the production of Paracetamol. Incorporated in 1980, the company boasts a legacy of over four decades, marked by resilience, innovation, and a commitment to quality.
At the heart of Valiant Laboratories’ operations lies its state-of-the-art manufacturing unit located in Palghar, Maharashtra, sprawling across 2,000 square meters of land. This facility stands as a testament to the company’s dedication to quality and efficiency, boasting an impressive annual installed capacity of 9,000 metric tons.
In addition to its manufacturing capabilities, Valiant Laboratories has invested in an advanced Research and Development (R&D) facility, equipped with a cutting-edge analytical laboratory. This facility serves as a hub for research and innovation, facilitating the development of new products and the enhancement of existing ones.
Financial Insights into Valiant Laboratories
| Financial Year ending / Period ending (Amt in Crores) | |||
| Particulars | FY21 | FY22 | FY23 |
|---|---|---|---|
| Assets | 106.31 | 181.81 | 212.76 |
| Revenue | 183.78 | 293.47 | 338.77 |
| Profit After Tax | 30.59 | 27.50 | 29.00 |
| Net Worth | 88.58 | 71.46 | 100.49 |
| Total Borrowing | 0.35 | 60.68 | 59.40 |
IPO Objectives
Valiant Laboratories IPO Size is Rs 152.46 Crores and would be used for the following purpose.
- 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.
Valuation of Valiant Laboratories IPO
- Its IPO price band is Rs 133 to 140 per share
- If we consider last year FY23 EPS of Rs 8.91, P/E ratio works out to be 16x
- If we consider last 3 years weighted EPS of Rs 9.43, P/E ratio works out to be 15x
- The listed peers like Laxmi Organic Industries Limited trading at P/E 66x (Highest) and Granules India Ltd is trading at P/E of 15x (Lowest) and industry average P/E is 40.5x. Hence, the IPO Price band at P/E of 16x to 15x is attractively priced.
Valiant Laboratories IPO GMP
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Positive Aspects of Valiant Laboratories IPO
Investors should also consider these positive aspects when evaluating this IPO:
- Established Track Record: Valiant Laboratories, incorporated in 1980, has a long-standing presence in the pharmaceutical ingredient manufacturing sector. With a history dating back over four decades, the company has accumulated valuable industry expertise and experience.
- Diversification Plans: The investment in VASPL for the specialty chemicals manufacturing facility demonstrates Valiant Laboratories’ commitment to diversifying its product portfolio. This strategic move can reduce the company’s reliance on a single product and enhance its growth potential.
- R&D Facility: Valiant Laboratories has an in-house research and development facility equipped with an analytical laboratory. This infrastructure supports the company’s efforts in developing new products and improving existing ones.
- Revenue Growth: Valiant Laboratories has demonstrated consistent revenue growth in recent years.
- Healthy Financial Metrics: Key financial indicators, such as a Price/Earnings ratio (P/E) of 15.71, Return on Equity (ROE) of 33.73%, and Return on Capital Employed (ROCE) of 22.76%, suggest financial stability and efficiency.
- Attractive IPO Price: Valiant Laboratories IPO Price has decent valuation in the P/E of 15x to 16x while industry average P/E is 40x.
Risk Factors in Valiant Labs IPO
Investors should consider these negative of risk factors before investing in this IPO
- Declining margins: Company margins are on declining mode in the last 3 years.
- Single-Product Focus: Valiant Laboratories primarily focuses on manufacturing Paracetamol. Any changes in the demand for this product or disruptions in the paracetamol API industry could significantly impact the company’s revenues and profitability.
- Dependence on a Single Manufacturing Facility: The company operates from a single manufacturing facility located in Palghar, Maharashtra. Localized social unrest, natural disasters, production disruptions, or shutdowns at this facility could have adverse effects on the business and financial condition of Valiant Laboratories.
- Quality Compliance: The pharmaceutical industry is subject to strict quality requirements and regular inspections. Non-compliance with quality standards may result in the cancellation of orders and damage to the company’s reputation.
- Supplier Dependency: Valiant Laboratories relies on a limited number of suppliers for its raw materials, primarily concentrated in the western region of India. Dependence on a few suppliers may lead to higher procurement costs and operational interruptions.
- Investment in Subsidiary: A significant portion of the IPO proceeds is earmarked for investment in Valiant Advanced Sciences Private Limited, a subsidiary that is yet to commence commercial operations. Delays or cost overruns related to this subsidiary’s projects could negatively impact Valiant Laboratories’ financial condition.
- Market Dependency: The majority of Valiant Laboratories’ operative income is derived from the domestic market. Adverse developments in the domestic market could have a detrimental effect on the company’s business.
- Customer Concentration: The company relies on a few customers for a significant portion of its revenues and does not have long-term arrangements with them. Any failure to maintain these customer relationships could adversely affect Valiant Laboratories’ financial performance.
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Valiant Laboratories IPO Review – Should you invest or avoid?
- Valiant Laboratories Limited brings to the table a rich legacy spanning over four decades in the pharmaceutical ingredient manufacturing industry. With a steadfast commitment to quality and innovation, the company has positioned itself as a reputable player in the market. Its impressive manufacturing capabilities, supported by a state-of-the-art R&D facility, underscore its dedication to excellence. Furthermore, Valiant Laboratories has demonstrated consistent revenue growth over the years. Valiant Laboratories Share price is also attractively priced. These factors make it an attractive proposition for investors looking to participate in its IPO.
- Despite its strengths, Valiant Laboratories faces certain inherent risks. The company’s heavy reliance on the production of Paracetamol as its primary product could leave it vulnerable to market fluctuations and changes in demand for this specific drug. Additionally, operating from a single manufacturing facility exposes the company to the risk of localized disruptions or natural disasters that could disrupt production. Moreover, the pharmaceutical industry’s stringent quality standards mean that any lapses in compliance could lead to order cancellations and damage to its reputation.
Investors can go through the Valiant Laboratories IPO RHP for all risk factors and can invest in this IPO.
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Convincing Analysis.Investors should subscribe to the IPO and try their luck.