Quest Laboratories Limited IPO

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Quest Laboratories Limited is a pharmaceutical company engaged in the development, manufacturing, and distribution of a diverse range of pharmaceutical formulations. These products encompass antibiotics, antimalarials, antispasmodics, anti-inflammatories, antidepressants, respiratory medications, and more. They are available in different forms like tablets, oral liquids, dry powders, and ointments. All formulations are marketed under the brand name “Quest Laboratories Limited,” covering ethical, generic, and over-the-counter drugs. This comprehensive product range addresses diverse medical needs and patient preferences.

Market Strategy:

i. Quest Laboratories serves both government and private institutions through collaborative approaches that offer benefits like regulatory compliance, cost efficiency, access to specialized technologies, reduced lead times, and risk mitigation.
ii. The company has successfully bid for government contracts with major central and state institutions.
iii. They currently serve 12 states and 2 union territories, focusing on a steady supply chain through relationships with reliable suppliers across several Indian regions.

Product Development and R&D:

i. Quest Laboratories constantly expands its product portfolio through research and development. The company has an in-house department dedicated to formulation development, quality control, and product stability studies.
ii. The R&D team conducts validation processes to ensure that their formulations meet regulatory standards and customer expectations.

Government Support:

Quest Laboratories has benefited from several government initiatives, such as the Madhya Pradesh MSME Yojna and MSME Promotion Schemes, providing subsidies for capital investments in machinery and interest payments. This support has enabled the company to grow its operations, enhance productivity, and create jobs.

Quest Laboratories Limited’s comprehensive business model, backed by certifications, quality control, R&D, government support, and a highly skilled management team, enables it to meet the diverse needs of the domestic and international pharmaceutical market.

Objects of the Quest Laboratories Limited IPO:

The company proposes to utilize the Net Proceeds from the Issue towards funding the following objects: i. Funding of capital expenditure towards purchase of plant and machinery for expansion at the existing manufacturing facility; ii. Funding working capital requirements of the company; iii. General corporate purposes;
DRHP of Quest Laboratories Limited IPO
RHP of Quest Laboratories Limited IPO

Quest Laboratories Limited IPO Details:

Open Date: May 15 2024
Close Date: May 17 2024
Total Shares: 4,449,600
Face Value: ₹ 10 Per Equity Share
Issue Size: 43.16 Cr.
Lot Size: 1200 Shares
Issue Price: ₹ 93 - 97 Per Equity Share
Listing At: NSE Emerge
Listing Date: May 23 2024

Promoters And Management:

Mr. Anil Kumar Sabarwal, aged 56 years, is the Promoter, Chairman and Managing Director of the Company. He holds Secondary School Examination Certificate from Kendriya Vidyalaya Sriganga Nagar, Cantt Raj School, in the year 1985. He is responsible for crafting and implementing the overall strategy of the company. He has been instrumental in managing & leading the operations of the company. He is responsible for the entire management and administration of the Company and brings about innovation through creation of new capacities, development of products, exploring and evaluating ways of penetrating existing markets and developing new markets in India and abroad. He has over 25 years of experience in the same company. Ms. Tejaswini Sabarwal, aged 28 years, is the Promoter and Whole Time Director of the Company. She has completed her Bachelor of Pharmacy from Swami Vivekanand College of Pharmacy, Indore in the year 2017. She has an experience of around 5 Years in the Company. She looks after the day-to-day development and planning of Quality Control section of the Company. Mr. Rahul Dangi, aged 27 years, is the Whole Time Director of the Company. He holds a Degree of Bachelor in Pharmacy from Vedic Institute of Pharmaceutical Education & Research, Sagar in the year 2017. He has an experience of around 4 years in the Company. He is responsible for handling Production Department of the Company.

Financials of Quest Laboratories Limited IPO:

Particulars ( In Lakhs )
2021
2022
2023
9M-FY24
Revenue from Operations 3,036 5,948 6,164 6,208
Other Income 7 6 23 10
Total Revenue 3,044 5,954 6,187 6,218
Cost of Material Consumed 2,443 4,427 4,174 3,996
Change in Inventories 3 22 8 -10
Employees Benefit Expenses 253.1 346 357 330
Other Expenses 195 506 843 683
EBITDA 149 652 805 1,218
Depreciation & Amortisation 39 46 55 42
Finance Cost 31 30 54 63
EBIT 110 606 750 1,177
OPM (%) 4.90% 10.96% 13.01% 19.60%
PBT 79 577 696 1114
Tax 13 166 193 339
PAT 66 411 503 775
NPM (%) 2.15% 6.89% 8.13% 12.46%
No.of Shares 163.87 163.87 163.87 163.87
EPS 0.39 2.50 3.06 4.72

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Quest Laboratories Limited 62 5 3.06 31.6 97 159
Beta Drugs Limited 227 31 31.95 35.0 1,263 1,214
Alpa Laboratories Limited 93 13 6.00 10.6 90.2 190
Zenith Drugs Limited 114 5 N/A 20.6 62 106
* All the data is as per FY23.

Recommendation on Quest Laboratories Limited IPO:

Review and Recommendation of Quest Laboratories by team IZ is 5/10. 1. Quest Laboratories Limited is a prominent player in the pharmaceutical manufacturing industry, specializing in a wide array of pharmaceutical formulations. The company’s product portfolio includes antibiotics, antimalarials, antispasmodics, anti-inflammatories, antiemetics, medications for respiratory conditions, diabetes, antidepressants, and more. 2. These products are marketed under the brand “Quest Laboratories Limited” and encompass ethical drugs, generic drugs, and over-the-counter (OTC) medications. The formulations are available in diverse forms such as tablets, liquid orals, oral dry powders, oral rehydration salts (ORS), ointments, and external liquids, catering to varied medical needs and preferences. 3. Market Presence and Strategy Quest Laboratories has established a strong market presence across 12 states and two union territories in India. The company also successfully bids for and secures government tender contracts, reflecting its capacity for large-scale production and compliance with regulatory requirements. Its raw materials are primarily sourced from various Indian states, ensuring a robust and quality-assured supply chain. 4. Competition and Challenges In the highly competitive chemical and pharmaceutical sector, Quest Laboratories faces challenges from both domestic and international players. Competition is primarily based on product quality, brand image, prompt delivery, and customer service. Despite these challenges, Quest Laboratories continuously strives to enhance its distribution channels, brand image, and product offerings to expand its market share both domestically and internationally. 5. Government Support and Initiatives The company benefits from various government initiatives aimed at supporting the MSME sector, such as the Madhya Pradesh MSME Yojna. These initiatives have provided financial subsidies that have facilitated investments in machinery and eased the financial burden, enabling further growth and expansion of operations. 6. The Revenue has Increased from Rs.30 Crores in FY21 to Rs.61 Crores in FY23. 7. The EBITDA has Increased from 1 Crore in FY21 to 8 Crores in FY23. 8. The PAT has Increased from 66 Lakhs in FY21 to 5 Crores in FY23. 9. As per FY23, CFO/EBITDA is 0.99, As per FY24, EPS is 6.30, 10. Market Capitalization is 159 Crore & P/E is 15.38x based on FY24

Lead Manager of Quest Laboratories Limited IPO:

  1. SHRENI SHARES PRIVATE LIMITED

Registrar of Quest Laboratories Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Quest Laboratories Limited Plot No. 45, Sector III Pithampur Industrial Area, Pithampur Dhar - 454775, Phone: 07292292374 Email: investors@questlabltd.com Website: https://www.questlabltd.com/

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