Valiant Laboratories Limited IPO

About the company:

Formed as a partnership firm in the year 1980 as Bharat Chemicals & later converted into a public limited company as Valiant Laboratories Ltd. It is an Active Pharmaceutical Ingredient (“API”) / Bulk Drug manufacturing company focusing on the manufacturing of various grades of paracetamol.
The manufacturing facility at Palghar, Maharashtra is equipped with an installed capacity of 9,000 MT per annum. This facility also holds a certificate of Good Manufacturing Practices (GMP) for the manufacture and sale of bulk drugs / API.
The API industry in India (including exports) is expected to grow at a CAGR of 9%-11% between FY2022 to FY2027. The paracetamol API industry (Domestic + exports) grew from Rs. 22 bn in FY2017 to Rs.39 bn in FY2023 and this industry in India is expected to grow at 5%-7% CAGR between FY2023 to FY2027.

Objects of Issue:

- Financing partially the capex requirements, towards setting up of a manufacturing facility for specialty chemicals, in its wholly owned subsidiary-Valient Advanced Sciences Private Limited (VASPL) (~? 80 Crores).
- Funding working capital requirement for VASPL (~? 45 Crores)
- Balance general corporate purposes.

Key Strengths:

- Reduced dependency on the import of raw materials i.e., from 74.86% of total procurement of raw materials in the fiscal year 2021 to 11.87% in the fiscal year 2023.

- Experienced and qualified professional management team with a strong execution track record.

- Strategically located manufacturing facility that provides ready access to the port facilities resulting in cost & logistical advantage.

- Strong financial performance as revenue from operations grew at a CAGR of 23.9% and restated profits after tax at a CAGR of 26.81% from fiscal year 2017 to 2023.

Risks:

- Most of the net proceeds are intended to be invested in subsidiary VASPL, which is yet to commence its operations.
 
- Single product manufacturing company. Any disruption in the paracetamol API industry would severely impact the business of the company
 
- Concentrated list of suppliers, any delay or disruptions in the supply chain would affect the operations of the company. The top 3 suppliers account for 85.35% of the total procurement in value terms.
 
- High geographical and clientele concentration any adverse developments in them would severely impact the operation and business of the company.
 
- The company does not own any registered copyright, trademark, trade name, or other intellectual property right in its name with Trademark Registry.

Financial Snapshot: