Zenith Drugs LTD IPO- Review, Valuation, Opening Date & GMP

Zenith Drugs Limited IPO - Complete Overview

Zenith Drugs Limited, established in 2000, is a pharmaceutical company based in Indore, India, known for producing and trading affordable, high-quality medicines, particularly generic drugs. 

They're expanding with a new facility in Village Muradpura, Indore. Their products reach countries like Costa Rica, Malawi, Mauritius, Sudan, Bhutan, Cambodia, Tajikistan, and more. 

They specialize in third-party manufacturing for renowned companies like Ajanta Pharma and Zest Pharma. With 89 employees as of March 31, 2023, Zenith Drugs aims to excel globally in pharmaceuticals through technology, service, and growth.

The company follows WHO-GMP guidelines and holds ISO 9001:2015 certification, ensuring quality standards. Their product range includes ORS Powder, Liquid Orals, Ointments, Liquid Externals, and Capsules, with over 600 FDA-approved products, 325 in current production.

 

Zenith Drugs Limited IPO Overview

Zenith Drugs Limited IPO date is slated to be open for subscription from February 19, 2024, to February 22, 2024. This NSE SME IPO follows a Book Built Issue IPO.

Zenith Drugs Limited IPO price is fixed at Rs.75 to Rs.79  per share. 

The total issue size of this IPO amounts to Rs.40.68  CR. The company has reserved 50% for institutional investors, 15% for non-institutional investors, and 35% for retail investors. 

 

 

Zenith Drugs Limited IPO timetable (Tentative)

Events	Date
IPO Opening Date	19 February 2024
IPO Closing Date	22 February 2024
IPO Allotment Date	23 February 2024
Refund initiation	26 February 2024
IPO Listing Date	27 February 2024

 

Zenith Drugs Limited IPO Details

IPO Opening & Closing Date	19 February to 22 February 2024
Face Value	Rs.  per share
Issue Price	Rs.75 to Rs.79 per share
Lot Size	1600 Shares
Price of 1 lot	Rs. 126,400
Total Issue Size	5,148,800 shares (aggregating up to Rs.40.68 Cr)
Fresh issue	5,148,800 shares (aggregating up to Rs.40.68 Cr)
Listing at	NSE SME
Issue Type	Book Built Issue IPO
Registrar	Bigshare Services Pvt Ltd

 

Zenith Drugs Limited IPO Lot Details

Application	Lot	Shares	Amount
Minimum Lot Investment (Retail)	1 lot	1600	Rs. 1,26,400
Maximum Lot Investment (Retail)	1 lot	1600	Rs. 1,26,400
Minimum Lot Investment (HNI)	2 lot	3200	Rs. 2,52,800

 

Zenith Drugs Limited IPO Reservation

QIB Shares Offered	Maximum 50%
Retail Shares Offered	Minimum 35%
Other Shares Offered	Minimum 15%

 

 

Company Financial

Zenith Drugs Limited's financials have all shown significant increases from FY22 to FY23.

(Amount in Lakhs)

Period	Sep 30, FY 23	Mar 31, FY 23	Mar 31, FY 22
Total Assets	11,249.04	9,793.83	6,858.47
Total Revenue	6,948.43	11,569.65	9,266.63
PAT	539.38	515.29	312.86
Net worth	2,264.96	1,724.42	1,209.09
Reserve & Surplus	1,064.96	1,684.42	1,169.09
Total Borrowings	2,902.81	2,605.03	1,880.86

 

Revenue Distribution State-Wise

Revenue distribution for Zenith Drugs Limited varied across states from FY21 to FY23.

(in % age)

Particulars	Mar 31, FY 23	Mar 31, FY 22	Mar 31, FY 21
Madhya Pradesh	21.58%	39.53%	45.16%
Maharashtra	15.66%	12.11%	18.87%
Rajasthan	14.69%	10.12%	7.30%
Karnataka	10.06%	10.12%	0.49%
Others	38.01%	28.12%	28.18%
Total	100%	100%	100%

 

Revenue by Operations

 Zenith Drugs Limited's revenue from operations increased from FY22 to FY23.

(Amount in Lakhs)

Particulars	Sep 30, FY 23	Mar 31, FY 23	Mar 31, FY 22
Revenue from operations	6,940.93	11,451.91	9,165.50
Other Income	7.50	117.74	101.12
Total Revenue	6,948.43	11,569.65	9,266.63

 

The Objective of the Issue

The company intends to use the net proceeds for the following objectives.

• Purchase of Machinery & Equipments for Setting up New Unit.

• Existing Manufacturing Block Upgradation.

• Working Capital Requirements.

• General Corporate Purposes.

 

Promoters and Management of Zenith Drugs Limited IPO

1. Mr. Sandeep Bhardwaj.

2. Mr. Bhupesh Soni.

3. Mr. Ajay Singh Dassundi.

Pre-issue Promoter Shareholding	100.00%
Post-issue Promoter Shareholding	69.98%

 

Zenith Drugs Limited IPO Lead Managers

• Gretex Corporate Services Limited 

 

 

Peers of Zenith Drugs Limited IPO

Zenith Drugs Limited IPO has a lower Price/Earnings ratio and EPS compared to its peers.

Name of the Company	Face value (Rs. per Share)	P/ E	EPS (Basic) (Rs.)
Zenith Drugs Limited	10.00	18.41	4.29
Sudarshan Pharma Industries Ltd	10.00	41.11	5.48
Sigachi Industries Limited	10.00	28.64	13.52

 

Evaluation

The IPO is priced within the range of Rs.75 to Rs.79  per share.

Evaluation of P/E Ratio:

- Considering the FY23 EPS of Rs 4.29 from the last year, the resulting P/E ratio is 18.41x.

- Taking into account the weighted EPS of Rs 3.44 for the last three years, the P/E ratio amounts to 22.96x.

Comparative Analysis with Industry Average:

- The industry's average P/E is 33.9x.

As a result, the IPO price range, with a P/E ratio ranging from 18.41x to 22.96x, seems undervalued in comparison to the industry average of 33.9x.

 

Dividend Policy

The company hasn't paid dividends in past fiscal years. Whether we can pay them in the future depends on factors like profits, past dividend trends, capital needs, legal restrictions, and other relevant considerations evaluated by our Board.

 

IPO's Strengths

• The company boasts a diverse product portfolio.

• Its commitment to quality and innovation provides a significant market advantage over many competitors.

• It has a competitive edge in terms of both product quality and bidding.

• The company benefits from a well-established marketing and distribution network.

• The promoters bring extensive experience to the field, enhancing the company's credibility and know-how.

 

IPO's Weaknesses

• The company's growth is heavily reliant on the pharmaceutical industry, exposing it to fluctuations in that market and competition from international suppliers.

• There's a need for substantial financial resources to expand operations nationally.

• Market share and presence are limited to certain segments.

• The company is highly dependent on its existing customer base.

• Competitors can quickly replicate similar products, posing a threat to the company's market position.

 

 

IPO GMP Today

The Latest GMP of Zenith Drugs Limited IPO is Rs. 35

 

Conclusion

In conclusion, the Zenith Drugs Limited IPO presents an opportunity for investors to participate in the growth story of a well-established pharmaceutical company with a strong track record of quality production and global expansion. With a diverse product portfolio, adherence to quality standards, and experienced management, the company is poised for further growth and success in the pharmaceutical industry.

While the IPO price range appears to be undervalued compared to industry averages, investors should carefully consider the risks associated with the pharmaceutical sector's volatility, dependency on existing customer base, and the need for significant financial resources for expansion.

 

 

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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