Remus Pharmaceuticals Limited IPO

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i. Remus Pharmaceuticals is engaged in marketing & distribution of finished formulations of pharmaceutical drugs. The company also deals in API (Active Pharmaceutical Ingredient). They also provide technical consultancy services to various distributors for preparation of reports on the dossiers of the products to be registered by them in various countries.

ii. The Company is majorly engrossed in the pharmaceutical business involving marketing, trading and distribution of wide range of pharmaceutical finished formulations and products. Depending upon business requirments, they get finished pharmacuetical formulations manufactured on loan license or contract manufacturing. Such manufacturing is on principle to principle basis. The company has presence through registered and/or under registration products in countries namely Bhutan, Bolivia, Chile, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Jamaica, Kuwait, Madagascar, Malaysia, Hong kong, Myanmar, Panama, Trinidad and Tobago, Uzbekistan, Venezuela, Vietnam.

iii. They deal in drug forms like Capsules, Cream, Eye Drops, Gel, Infusion, Inhalation, Inhaler, Injection, Nail Lacquer, Nasal Solution, Nasal Spray, Nebuliser, Ointment, Ophthalmic, Oral Gel, Oral Solution, Oral Suspension, Sachet, Suspension, Tablet.

iv. Their product portfolio consists of 429 products. They operate under different brand names across the globe. The company has 295 products registered in total 13 countries and total 134 products are under process of registration in 16 countries, which shall boost the growth of thecompany.

v. They have business to business supply agreements with 58 domestic distributors and 139 international distributors for distribution and/or contract manufacturing supply.

vi. Their Core business can be divided in following categories:

a) Marketing and Distribution of approved finished formulations in various countries
b) Trading of Active Pharmaceutical Ingredients
c) Technical Consultancy on preparation of reports on pharmaceutical dossiers

Competitive Strengths

1. Experienced Promoters and Management Team
2. Wide range of Products
3. Strategic Location of Contract Manufacturing Facilities
4. Diversified business operations and revenue base

Objects of the Remus Pharmaceuticals Limited IPO:

The Issue Proceeds from the Fresh Issue will be utilized towards the following objects: 1. To Meet Working Capital Requirements 2. Funding investments for acquisitions and general corporate purposes 3. To meet Public Issue Expenses
DRHP of Remus Pharmaceuticals Limited IPO
RHP of Remus Pharmaceuticals Limited IPO

Remus Pharmaceuticals Limited IPO Details:

Open Date: May 17 2023
Close Date: May 19 2023
Total Shares: 388,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 47.69 Cr.
Lot Size: 100 Shares
Issue Price: ₹ 1150-1229 Per Equity Share
Listing At: NSE Emerge
Listing Date: May 29 2023

Promoters And Management:

i. Mr. Arpit Deepakkumar Shah, aged 35 years, is Managing Director and Promoter of the Company. He holds the Degree of Bachelor of Engineering (Information Technology) from Saurashtra University. He was appointed as an Executive Director of the Company since incorporation. Thereafter, he was redesignated and appointed for 3 years as Managing Director of the Company w.e.f. January 16, 2023, liable to retire by rotation. He is having more than 11 years of experience in the field of sales and operations. He has been instrumental in taking major decision of the Company. He is playing vital role in business operations, business development and strategic decisions of the Company. ii. Mr. Swapnil Jatinbhai Shah, aged 37 years, is the Chairman, Whole Time Director and Promoter of the Company. He has completed Open Learning Diploma in Business Entrepreneurship from Entrepreneurship Development Institute of India, Bachelor of Engineering (Chemical) from Gujarat University, Master of Business Administration from Hofstra University and Diploma in International Marketing from Ahmedabad Management Association. He was appointed as an Executive Director of the Company since incorporation. Thereafter, he was redesignated and appointed for 3 years as Chairman and Whole Time Director of the Company w.e.f. January 16, 2023, liable to retire by rotation. He is having more than 12 years of experience in the field of finance and business operations. He has been instrumental in taking major decision of the Company. He is playing vital role in business operations, business development, financial matters and strategic decisions of the Company. iii. Ms. Roma Vinodbhai Shah aged 35 years is the Whole Time Director and Promoter of the Company. She has completed Bachelor of Pharmacy from Gujarat University and Master of Science (Pharmaceutical Manufacturing) from Stevens Institute of Technology, New Jersey. She was appointed as an Executive Director of the Company since incorporation. Thereafter, she was redesignated and appointed for 3 years as Whole Time Director of the Company w.e.f. January 16, 2023, liable to retire by rotation. She is more than 8 years of experience in project management and quality assurance. She is handling regulatory matters along with product registrations and documentations of the Company. She has been instrumental in developing business consultancy vertical of the Company.

Financials of Remus Pharmaceuticals Limited IPO:

A) Balance Sheet
Particulars (in Lakh) 2020 2021 2022
Equity Share Capital ₹1 ₹1 ₹100
Reserves ₹201 ₹304 ₹543
Borrowings ₹36 ₹28 ₹19
Trade Payables ₹131 ₹516 ₹467
Other Liability ₹161 ₹256 ₹462
Total Liability ₹530 ₹1,105 ₹1,591
Fixed Assets Block ₹50 ₹39 ₹31
CWIP ₹0 ₹0 ₹0
Investments ₹0 ₹7 ₹307
Other Assets ₹4 ₹309 ₹484
Total Non-Current Assets ₹54 ₹355 ₹822
Receivables ₹163 ₹360 ₹292
Inventory ₹44 ₹115 ₹159
Cash and Cash Balance ₹120 ₹83 ₹115
Other Assets ₹150 ₹192 ₹204
Total Current Assets ₹477 ₹750 ₹770
Total Assets ₹530 ₹1,105 ₹1,591
B) P&L Statement
Particulars (In Lakh) 2020 2021 2022
Sales ₹1,192 ₹1,842 ₹2,472
Sales Growth 0.00% 54.53% 34.20%
COGS ₹704 ₹1,150 ₹1,227
COGS % of Sales 59.06% 62.43% 49.64%
Gross Profit ₹488 ₹692 ₹1,245
Gross Margins 40.94% 37.57% 50.36%
Employee Benefit & Other Expenses ₹449 ₹617 ₹838
S&G Sales % 37.67% 33.50% 33.90%
EBITDA ₹39 ₹75 ₹407
EBITDA Margins 3.27% 4.07% 16.46%
Interest Cost ₹4 ₹4 ₹9
Interest %of Sales 0.34% 0.22% 0.36%
Depreciation ₹11 ₹18 ₹15
Dep %of Sales 0.92% 0.98% 0.61%
EBIT Margins 2.35% 3.09% 15.86%
Other Income ₹85 ₹81 ₹72
Earnings Before Tax ₹109 ₹134 ₹455
EBT % Sales 9.14% 7.27% 18.41%
Tax ₹28 ₹33 ₹116
Effective Tax Rate 25.69% 24.63% 25.49%
PAT ₹81 ₹101 ₹339
NPM 6.80% 5.48% 13.71%
No. of Equity Shares 0.1 0.1 10
Earning Per Share ₹8.12 ₹10.26 ₹33.86
EPS Growth % 0.00% 26.35% 230.02%
Dividend Per Share ₹0 ₹0 ₹0
Dividend Payout Ratio 0.00% 0.00% 0.00%
Retained Earnings 100% 100% 100%
C) Cash Flow Statement
Particulars (Lakh) 2020 2021 2022
Cash From Operating Activity ₹130 ₹284 ₹504
Cash from Investing Activity -₹56 -₹309 -₹455
Cash from Financing Activity ₹6 -₹12 -₹17
Net Cash Flow ₹120 ₹83 ₹115
 

Comparison With Peers:

Name of the Company Revenue(Cr) Profit(Cr) EPS P/E CMP MCap
Remus Pharmaceuticals 43 8.5 57.82 21.27 1,230 181.18
Trident Lifeline Limited 31.69 6.01 5.23 25.90 135 156
Vaishali Pharma Limited 68.84 6.36 6.03 23.6 142 150
Chandra Bhagat Pharma Limited 95.2 0.73 0.97 124 131 98.8

Recommendation on Remus Pharmaceuticals Limited IPO:

Review and Recommendation of Remus Pharma by IZ team is 3/10 1. Remus Pharmaceuticals is a company involved in marketing and distributing pharmaceutical drugs. They also trade Active Pharmaceutical Ingredients (API) and provide consultancy services for registration of products in different countries. 2. They manufacture drugs through loan license or contract manufacturing. They have a presence in multiple countries with registered and under-registration products. Their product range includes various drug forms. 3. They have a portfolio of 429 products, with 295 registered in 13 countries and 134 under registration in 16 countries. They have supply agreements with domestic and international distributors. 4. Their core business includes marketing and distribution, API trading, and technical consultancy. 5. Revenue has increase from 11 Crores in Fy20 to 25 Crores in Fy22. The sales growth rate was 54.53% in 2021 and 34.20% in 2022, indicating a positive trend. 6. Gross profit margins, however, fluctuated, decreasing from 40.94% in 2020 to 37.57% in 2021 and then significantly increasing to 50.36% in 2022. 7. EBITDA margins showed a steady growth trend, starting at 3.27% in 2020 and reaching 16.46% in 2022. 8. PAT increased from ₹0.81 Cr in 2020 to ₹3.39 Cr in 2022. 9. Based on Fy23 numbers, the asking P/E in the IPO is 21.27x which looks overvalued.

Lead Manager of Remus Pharmaceuticals Limited IPO:

  1. Beeline Broking Limited

Registrar of Remus Pharmaceuticals Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Remus Pharmaceuticals Limited 1101 to 1103, South Tower, One 42, B/H Ashok Vatika, Nr. Jayantilal Park BRTS, Ambli bopal Road, Ahmedabad - 380054 Phone: +079- 2999 9857 Email: cs@remuspharma.com Website: http://www.remuspharma.com/

Discussion on Remus Pharmaceuticals Limited IPO:

2 Comments

    Intresting part in the cash flow statement of 9Mfy23.

    They generated cash of ~5 cr from operations, 9.28 Cr is raised from loans, and 4.25 cr from issue of shares…

    So, ~18 cr is raised.

    Out of ~2 cr went to capex side and ~17 cr went to purchase of securities.

    Need to check where they have done investment.

    Mostly that investment has gone to:

    1. Our company has been allotted 1447760 equity shares of Ratnatris Pharmacueticals Private Limited, upon conversion of Compulsory Convertible Debentures (CCD), constituting 43.55% of the total paid up capital of Ratnatris Pharmacueticals Private Limited vide board resolution dated april 01, 2023.

    2. Our company has issued Bank Gaurantee of ₹ 38.10 crores in favour of Ratnatris Pharmaceuticals Private Limited.

    3. Our company has issued Bank Gaurantee of ₹ 56.25 crores in favour of Ratnagene Liefesciences Private Limited.

    The financials of Ratnatris Pharmacueticals Private Limited, are very bad. See link below.

    https://d2un9pqbzgw43g.cloudfront.net/main/WhatsApp-Image-2023-05-15-at-08.55.09.jpeg

    Debt as on 31.03.2022 is ~90 Crores and with EBITDA negative, they are not able to pay even the interest cost with the operations

    So, IPO looks very risky.

    Reply

    Pricing looks on higher side.

    Though growth has been phenomenal from ~11 Cr in Fy20 to ~44 Cr Annualised FY23 numbers. CAGR growth of 58%.

    Cash-flow from operations – 5.32+ 5+ 2.83+ 1.30 = ~14 Cr

    Capex done in last 4 years = ~6 Cr

    So, generated free cash flow of ~8 Cr

    Reply

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