Sudarshan Pharma Industries Limited IPO

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(i) The Company was originally incorporated under the Companies Act, 1956 vide certificate of incorporation dated July 23, 2008, issued by the Registrar of Companies, Mumbai. Later in the year 2016, the name of the company was changed from ―Sudarshan Specialty Chemsolve Private Limited to ―Sudarshan Pharma Industries Private Limited under the Companies Act.

(ii) The company was promoted by Mr. Hemal V. Mehta & Mr. Sachin V. Mehta. The promoters have a combined experience of over 25 years in the Special Chemical, Bulk drug and Pharmaceutical Industry.

(iii) Core Business of the Company

The company deals in Specialty Chemicals, Intermediates & Active Pharmaceuticals Ingredients. They outsource the manufacturing facility, deal in Import and Exports, indenting and Supply in Specialty chemicals, API & it’s intermediate. They provide order and get them manufactured from various suppliers in India and abroad regularly. Specialty chemicals and Intermediates having wide application in pharma, paint, food and adhesive Industry.

The Pharma & Specialty Chemical business operations are supported by various manufacturers having facilities which are approved by the FDA, WHO and other relevant authorities. 

They are also involved in Contract Manufacturing, outsource & Supply of Generic Pharma formulation and medicines to a healthcare institution, Government, NGO, and Hospital.

(iv) Presence

They operate both in domestic and international markets. Presently, they are supplying Active Pharmaceutical Ingredients (APIs), Intermediates Finished Dosage Formulations (FDFs) and Specialty Chemicals (SCs) in the domestic markets.

They have exported to countries like Uzbekistan, Bangladesh, Taiwan, Sultanate of Oman,(Muscat) Dubai, (UAE) & UK. Further, the company has a product pipeline ready for exports in countries likeSouth East Asia, Middle East & North Africa (MENA Region).

In domestic Pharmaceuticals markets, currently, they have a presence in 5 States and are servicing these states through a Supply Chain Network of Consignee Agents with their products range.

To develop the export business, they are in the process of applying for 16 formulation registrations in countries like Ghana, Georgia, Cambodia, Myanmar, Nigeria, Kenya, Malaysia & MINA region.

(v) Expansion Plans

The Management is planning for business expansion by having its own state of the art manufacturing facility at Wada, near Mumbai, Maharashtra. It shall comply with the FDA, WHO, and international standards to manufacture the pharmaceutical formulation and F & D facility. It also plans to develop distributor network & logistic facility in Mumbai, Delhi, Hyderabad, and Ahmedabad. This shall also support E-commerce and Online marketing of the company‘s products

After this, they shall be equipped with ultra-modern facilities to execute all types of manufacturing activities from manufacturing of tablets, capsules, dry powder, liquids to R&D, QC & packaging, etc.

(vi) Clients

Some of our major clients for our pharmaceuticals and specialty chemicals include domestic as well as international customers like Suan Hong Trading Ltd- Taiwan, Muscat Pharmaceuticals Mfg. Co- Oman, Nikapharma- Uzbekistan, RemexBangladesh, Rose Chemicals Ltd- the UK to name a few

Objects of the Sudarshan Pharma Industries Limited IPO:

The Object of the issue are: 1. To set up a dedicated manufacturing facility for Pharmaceutical Business =12.50 Cr 2. Distribution and Warehousing Centre‘s & Purchase of Corporate Office = 4.5 Cr 3. Additional Working Capital = 5.25 Cr 4. General Corporate Expenses = 2.8 Cr

Sudarshan Pharma Industries Limited IPO Details:

Open Date: Jun 12 2019
Close Date: Jun 24 2019
Total Shares: 34,40,000
Face Value: ₹ 10 Per Equity Share
Issue Size: 25.80 Cr.
Lot Size: 1600 Shares
Issue Price: ₹ 72 Per Equity Share
Listing At: NSE Emerge
Listing Date: Jul 01 2019

Financials of Sudarshan Pharma Industries Limited IPO:

(Particulars in Lakh)
Year Revenue EBITDA EBITDA% PAT PAT % EPS ROE P/E
2017 5551 76 1.4% 15 0.3% 0.12 4.7% 41.625
2018 8976 222 2.5% 73 0.8% 0.56 8.5%
2019 14001 517 3.7% 234 1.7% 1.80 12.5%
IZ Review 1. The company has shown excellent growth in terms of Revenue and PAT in the last 3 years. 2. However, the company's business has very low margins. The PAT margins are very less and around only 2%. 3. The peers like Alembic, Shilpa Medicare and TTK Healthcare are trading at P/E of P/E of 26, 24 and 37 respectively on the basis of FY19 financials.

Comparison With Peers:

Peer Mcap(cr) EBITDA% PAT% EPS P/E ROE
Alembic 1150 32% 27% 1.69 26.0 10.20%
Shilpa 2804 26% 18% 15.22 24.9 9.60%
TTK Healthcare 921 8.18% 3.77% 17.25 37.80 10.10%
The peer analysis shows that Sudarshan Pharma has a very low margin business. The asking price of IPO is very high as compared to the established players in the market.

Recommendation on Sudarshan Pharma Industries Limited IPO:

Review and Recommendation of Sudarshan Pharma Industries Limited IPO from IZ Team are 3/10. [The Issue is asking a P/E multiple of 41x based on FY19 financials which looks very stretched. As per DRHP, the company has done valuation of shares based on 6MFY19 financials and issued shares at Rs.55. So the IPO price is 36% higher than that. Moreover, the Pharma sector has not given a decent return in the last 1-2 years. ]

Lead Manager of Sudarshan Pharma Industries Limited IPO:

  1. First Overseas Capital Limited

Bid Details of Sudarshan Pharma Industries Limited IPO as on
18-Jun-2019 13:10:00 IST

Category No.of shares offered No. of shares bid
1,632,000 248,000
1,632,000 1,241,600
176,000 176,000
3,440,000 1,665,600
QIBs No
QIBs+HNIs Subscription 0.15X
Retail Subscription 0.76X
Total Subscription 0.46X

Discussion on Sudarshan Pharma Industries Limited IPO:

    The price band has also changed from 75 to 72.

    First you confirm your broker that thay are dealing in SME shares or not than only apply.

    My account is with NSDL and trade in NSE. This IPO is listing in NSE-SME. Can I apply for the IPO? Is it possible to buy and sell these shares through NSE?

      NSDL and CDSL are the depositories in India. There only work is to hold shares in demat form. Coming back to your question, you can very well apply in IPO through net banking and later on, you can sell on NSE Platform without any issue.

      who is your broker? HDFC Securities and many more do not allow SME to trade on their platform.