Eris Life sciences:
IPO
Eris Lifesciences is entering the primary market on Friday
16 June 2017, with an offer for sale (OFS) of up to 2.89 crore equity shares of
Re. 1 each by PE firm ChrysCapital (77% of OFS), promoters and other
shareholders in the price band of Rs. 600 to Rs. 603 per share. Representing
21% of the post issue paid-up share capital, issue will raise Rs. 1,741 crore
at the upper end and close on Tuesday, 20 June. Listing is expected on 29 June.
The Ahmedabad-based pharma firm has been manufacturing and
selling branded pharmaceutical products in cardiovascular (chronic) and
anti-diabetic (acute) categories for a decade.
The company has a formulation facility in Guwahati, Assam,
which contributes 60 percent of revenues, while its manufacturing partner Sozin
Flora Pharma contributed 28 percent. The rest came from third-party
manufacturing.
While the company’s growth since its inception 10 years ago
is marvelous, what is commendable is that it did not require any external
funding to fuel the same.
As 31-3-17, on net worth of Rs. 540 crore, company has a debt free balance
sheet. Surplus cash and equivalents are Rs. 261 crore, translating into
cash per share of Rs. 19. Currently, company has only 9 shareholders – 5
promoters with combined holding of 59.18%, whose stake, post IPO will shrink to
55.93%. Besides ChrysCapital’s 16.25%, 3 individuals own 24.57%, who will own
23.07% post IPO.
Very strong
fundamentals, expected healthy growth, cash rich status, no US FDA overhangs
make this issue an ‘apply’, despite uneconomical pricing.
Source: Bloomberg,
SP Tulsian
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