Quest Laboratories Ltd IPO: Review, Valuation, Date & GMP

Quest Laboratories Limited IPO  - Complete Overview

Established in 1998, Quest Laboratories Limited specializes in manufacturing pharmaceutical formulations spanning a wide spectrum, including antibiotics, antimalarials, antispasmodics, anti-inflammatories, antiemetics, respiratory medications, diabetes treatments, antidepressants, and more. 

The company produces a diverse range of products, including ethical drugs, generic drugs, and over-the-counter drugs (OTC). 

Quest Laboratories adheres to rigorous quality standards, holding WHO Schedule M GMP and GLP certifications, ensuring compliance with World Health Organization guidelines. Additionally, the company maintains ISO 9001:2015 certification and ISO/IEC 17025:2017 accreditation. 

Equipped with advanced instruments such as HPLC (High-Performance Liquid Chromatography), GC (Gas Chromatography), FTIR (Fourier Transform Infrared Spectroscopy), UV (Ultraviolet-Visible Spectroscopy), and Dissolution apparatus, the in-house laboratory ensures quality control and product integrity. 

With a manufacturing facility located in Pithampur, Dhar, Madhya Pradesh, spanning approximately 4,065 square meters, Quest Laboratories caters to both private sector and government institutions, receiving regular sales orders. 

The company Operate within the domestic market across 12 states and 2 union territories, including Uttar Pradesh, Madhya Pradesh, Maharashtra, Delhi, Jharkhand, Assam, Karnataka, Jammu & Kashmir, Rajasthan, West Bengal, Gujarat, Telangana, Haryana, and Bihar.

Quest Laboratories Limited IPO Overview

Quest Laboratories Limited IPO date is slated to be open for subscription from May 15, 2024, to May 17, 2024. This is an NSE SME IPO follows a Book Built Issue IPO.

Quest Laboratories Limited IPO price is fixed in the range of Rs. 93 to Rs.97 per share. 

The total issue size of this IPO amounts to Rs.43.16 Cr. Out of the total share the company has allocated 35% to retail investors, 50% to institutional and 15% to non-institutional investors.

Company Financial

Compared to the financial year ending March 31, 2023, and March 31, 2022, Quest Laboratories Limited has seen growth in total assets, net worth, and total revenue. The profit after tax and total borrowing has also increased.

(Amount in Lakhs)

Period	31 Dec 2023	31 Mar 2023	31 Mar 2022
Total Assets	5,869.09	4,664.72	3,479.86
Total Revenue	6,217.83	6,186.60	5,954.20
PAT	774.93	502.85	410.50
Net worth	2,277.15	1,502.21	999.38
Reserve & Surplus	1,198.39	1,394.33	891.50
Total Borrowings	460.66	409.69	312.54

Government institution and private sector Revenue Break up

(Amount in Lakhs)

Particulars	December 31, 2023	March 31, 2023	March 31, 2022
Government Institution	4,136.93	3,817.61	3,040.15
Private Sector	2,071.05	2,346.45	2,908.15
Total	6,207.98	6,164.06	5,948.30

Geography-wise Revenue Break up

(Amount in Lakhs)

State	December 31, 2023	March 31, 2023	March 31, 2022
Uttar Pradesh	3412.08	1905.92	2596.77
Madhya Pradesh	2460.42	3119.75	1906.14
Maharashtra	23.11	295.92	430.62
Delhi	14.52	20.88	4.03
Jharkhand	2.73	-	24.41
Assam	31.17	707.88	628.88
Rajasthan	-	0.62	-
Bihar	-	4.65	5.45
Karnataka	166.48	7.20	4.49
West Bengal	-	-	38.19
Gujarat	-	38.80	14.57
Jammu & Kashmir	97.47	62.45	-
Telangana	-	-	144.44
Haryana	-	-	1.15
Export	-	-	149.25
TOTAL	6,207.98	6,164.06	5,948.39

The Objective of the Issue

The company will use the net proceeds to fulfil the following objectives:

1. Funding of capital expenditure towards purchase of plant and machineries for expansion at the existing manufacturing facility.

2. Funding working capital requirements of the company.

3. General corporate purposes.

Peers of Quest Laboratories Limited IPO

Name of the Company	Face Value (Rs)	EPS (Rs)	P/E Ratio
Quest Laboratories Limited	10	4.66	-
Beta Drugs Limited	10	19.57	66.43
Alpa Laboratories Limited	10	5.90	15.92
Zenith Drugs Limited	10	4.29	14.69

 

Evaluation

The IPO is priced within the range of Rs.93 to Rs.97 per share.

Evaluation of P/E Ratio

• Considering the FY23 EPS of Rs 4.66 from the last year, the resulting P/E ratio is 20.81x.

• Taking into account the weighted EPS of Rs 3.70 for the last three years, the P/E ratio amounts to 26.21x.

Comparative Analysis with Listed Peers

• The industry's average P/E is 32.34x.

As a result, the IPO price range, with a P/E ratio ranging from 20.81x to 26.21x, seems fully priced to the industry average of 32.34x.

IPO's Strengths 

• Diverse product capability spanning multiple products.

• Revenue streams from Government institutions.

• A well-rounded and varied product portfolio.

• A technology-driven organization with robust R&D capabilities.

• Good Laboratory Practice (GLP) certification from the Food & Drug Administration.

• Experienced Promoter and skilled management team.

• Efficient supply chain management.

IPO weaknesses 

• The company faces ongoing litigation.

• Revenue heavily depends on demand from the pharmaceutical industry, posing vulnerability to business disruption.

• Manufacturing facilities are concentrated in a single region, namely Pithampur, Indore, Madhya Pradesh.

• Overreliance on government sales may adversely affect business stability.

• Inability to effectively address heightened competition could result in loss of market share.

• The company experienced negative cash flows in previous years.
  
  

IPO GMP Today 

The Latest GMP of Quest Laboratories Limited is Rs.80.

Quest Laboratories Limited IPO timetable (Tentative)

Quest Laboratories Limited IPO is scheduled from May 15 to May 17, 2024, with allotment on May 21, refund initiation on May 22, and listing on May 23, 2024.

Events	Date
IPO Opening Date	May 15, 2024
IPO Closing Date	May 17, 2024
IPO Allotment Date	May 21, 2024
Refund initiation	May 22, 2024
IPO Listing Date	May 23, 2024

Quest Laboratories Limited IPO Details 

Quest Laboratories Limited IPO, with a face value of Rs.10 per share, opens on May 15 and closes on May 17, 2024, offering 4,449,600 shares at Rs.93 to Rs. 97 per share, with a lot size of 1200 shares, aiming to raise Rs.43.16 Cr, and will be listed on NSE SME.

IPO opening & closing date	May 15, 2024 to May 17, 2024
Face value	Rs.10 per share
Issue Price	Rs.93 to Rs. 97 per share
Lot Size	1200 shares
Price of 1 lot	Rs. 116,400
Issue Size	4,449,600 shares (aggregating up to ₹43.16 Cr)
Fresh issue	4,449,600 shares (aggregating up to ₹43.16 Cr)
Listing at	NSE SME
Issue Type	Book Built Issue IPO
Registrar	Bigshare Services Pvt Ltd

Quest Laboratories Limited IPO Lot Details 

For Quest Laboratories Limited IPO, the retail investor minimum and maximum lot investments are both 1 lot (1200 shares) at Rs.116,400 while for HNI investors, the minimum investment is 2 lots (2400 shares) at Rs.232,800.

Minimum Lot Investment (Retail)	1 lot
Maximum Lot Investment (Retail)	1 lot
Minimum Lot Investment (HNI)	2 lot

 

Quest Laboratories Limited IPO Reservation

Institutional share Portion	50%
Non-institutional share Portion	15%
Retail share Portion	35%

Promoters and Management of Quest Laboratories Limited

• Mr. Anil Kumar Sabarwal 

• Ms. Tejaswini Sabarwal.

Pre-issue Promoter shareholding	90.36%
Post-issue Promoter shareholding	65.82%

 

Quest Laboratories Limited IPO Lead Managers

• Shreni Shares Limited

Dividend Policy

The Company has not paid any dividend in the past financial years.

 

 

Conclusion

Operating in a competitive environment, the company has experienced negative cash flow in the past. Additionally, the sudden growth in PAT in FY22 has raised concerns about its sustainability. Seasoned investors may apply for the upcoming IPO with a medium-term perspective to gain optimal profit.

 

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

 

To Read the Prospectus of the Company Click Here to Download the DRHP.

 

 

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