Quest Laboratories IPO (SME) Overview

Quest Laboratories Limited is a Indore (Dhar) based pharmaceutical company specializing in the manufacturing of a diverse range of pharmaceutical formulations. Quest Laboratories IPO is a book built issue of Rs 43.16 crores. The issue is entirely a fresh issue of 44.5 lakh shares

IPO opensMay 15, 2024
IPO ClosesMay 17, 2024
IPO Size (Rs.) ₹43.16 Cr
IPO Size (shares)4,449,600 shares
BreakupFresh issue only
Face Value:₹ 10
IPO Price in Rs :₹93 to ₹97 per share
Minimum Lot1200 Shares
Listing AtNSE SME
QIB ~50 %
NII Quota~15%
Retail Quota~35%
 Lead ManagerShreni Shares Limited 
Registrar  Bigshare
Market makerRikhav Securities

About Quest Laboratorie:

  • Quest Laboratories Limited is a pharmaceutical company specializing in the manufacturing of a diverse range of pharmaceutical formulations.
  • Marketed under the trademark “Quest Laboratories Limited,” these formulations cater to various medical needs and preferences, available in forms such as tablets, liquid orals, oral dry powders, oral powders (ORS), ointments, and external liquids.
  • They have approvals to manufacture more than 600 formulations. They e routinely manufacture 250 to 300 types of formulations based on market demand and limited formulation lines.
  • Their manufacturing facility is located at Pithampur Industrial Area, Pithampur, Dhar – Madhya Pradesh.
  • company is promoted by Mr. Anil Kumar Sabarwal and Ms. Tejaswini Sabarwal,

Financials: Quest Laboratories IPO

Particulars/ Rs Lacs9m Dec 20232022-232021-222020-21
Total Revenue6217.836,186.605,954.203,043.55
Profit after Tax774.93502.85410.565.5
Share Capital1078.76107.88107.88107.88
Net worth2277.151,502.21999.38588.84
Earnings per share7.184.663.810.61
Net Asset Value21.1113.939.265.46
Total borrowings460.66409.69312.54304.03
Post issue Share Capital1638.7   
FV10.0   
IPO price97.0   
EPS Fy233.1   
PE Fy2331.6   
EPS Fy24 (annualized)6.3   
PE Fy24  (annualized)15.4   
Market cap in Lacs15,895   
Market cap / Sales2.57   

Anchors: Quest Laboratories IPO

Quest Laboratories IPO: Salient Points

  • Company possesses Good Laboratory Practice (GLP) certificate issued by Food & Drug Administration, Bhopal, Madhya Pradesh.
  • Company operates in the domestic market across twelve (12) states and two (2) union territories namely Uttar Pradesh, Madhya Pradesh, Maharashtra, Delhi, Jharkhand, Assam, Karnataka, Jammu & Kashmir, Rajasthan, West Bengal Gujarat, Telangana, Haryana and Bihar
  • Client List:
  • From the net proceeds of IPO, they will:
Sr. NoParticularsAmount
1.Funding of capital expenditure towards purchase of Plant and Machineries for Expansion and Upgradation at the existing Manufacturing Facility situated at Dhar, Madhya Pradesh.2,600.00
2.Funding Working Capital Requirements of our Company1,000.00
  • Key Performance Indicators
Key Financial PerformanceDecember 31, 2023March 31, 2023March 31, 2022March 31, 2021
Revenue from Operations 6207.986,164.065,948.393,036.35
EBITDA 1208.63782.24646.55141.84
EBITDA Margin (%) 19.47%12.69%10.87%4.67%
PAT774.93502.85410.5065.50
PAT Margin (%) 12.48%8.16%6.90%2.16%
Return on equity (%) 34.03%40.20%51.69%11.78%
Debt-Equity Ratio (times) 0.200.270.310.52
Current Ratio (times) 1.421.251.171.10
  • Margins have seen an upward trajectory.
  • Debt has been in control.
  • Current Ratio ( Current assets /Liabilities) is healthy. indicating company’s ability to pay short- term obligations or those due within one year.
  • The revenue bifurcation split between government institution and private sector is as follows:
  Particulars*Sales Distribution
December 31, 2023March 31, 2023March 31, 2022March 31, 2021
Amount%Amount%Amount%Amount%
Government Institution4,136.9366.643,817.6161.933,040.1551.11547.9118.05
Private Sector2,071.0533.362,346.4538.072,908.1548.892,488.4381.95
Total6,207.98100.006,164.06100.005,948.30100.003,036.34100.00
  • Peers:
Company / Rs LacsRevenueNet ProfitNPM (%)ROEDebt /EquityPEMacp/sales
Quest Laboratories6,164.06502.858.16%40.20%0.2731(15.6)2.57
Beta Drugs15,787.461,881.6111.92%21.66%0.0431.13.84
Alpa Laboratories9,295.521,241.4513.36%8.99%0.0210.51.64
Zenith Drugs11,451.91515.334.50%35.13%1.5121.90.99
  • They have versatile manufacturing facility by which they can produce multiple products using a combination of processes.
  • There are many criminal cases pending against the promoters mainly from drug inspectors of various states. In one such case promoter has been held liable and has been sentenced for an imprisonment of 1 year and a fine of Rs. 20,000/-. He has got bail to appeal.
  • Two third supply is to Govt / Institutions.
  • Rs. 26 crore of the IPO proceeds is going towards Funding of capital expenditure towards purchase of Plant and Machineries for Expansion and Upgradation at the existing Manufacturing Facility situated at Dhar, Madhya Pradesh.
  • Quest Laboratories IPO is coming at a PE ratio of 31x (FY23 Earnings) and 15.6x (fy24 annualized earnings)
  • I intend to apply in Quest Laboratories IPO subject to availability of funds. Issue appears just average to me.
  • GMP as reported on social media has been Rs. 20.
  • Shreni Shares Private Limited is the lead manager with quite a decent record of good listing and performance subsequently. Past issues handled by them include Silkflex Polymers (India) Limited, Refractory Shapes Limited,Yash Optics & Lens, Gabriel Pet Straps Limited, DelaPlex Limited, Net Avenue Technologies Limited, Swashthik Plascon Limited, KK Shah Hospitals Limited, Marco Cables & Conductors Limited, Meson Valves India Limited, C P S Shapers Limited, AccelerateBS India Limited, Global Pet Industries Limited, Veefin Solutions Limited, Sancode Technologies Limited, Bright Outdoor Media Limited, Srivasavi Adhesive Tapes Limited, Arihant Academy Limited, PNGS Gargi Fashion Jewellery Limited, DAPS Advertising Limited, Olatech Solutions Limited etc.
  • Rikhav Securities is the market maker.They have been market maker in IPOs like Finelistings Technologies Limited, Birdy’s, Jay Kailash Namkeen, Yash Optics & Lens, K2 Infragen, Vruddhi Engineering Works, Royal Sense,Mayank Cattle Food, Docmode Health Technologies, Graphisads, KK Shah Hospitals, Kontor Space, Mangalam Alloys, Unihealth Consultancy, Mono Pharmacare, Bondada Engineering, Shoora Designs, Sangani Hospitals, Zeal Global Services, Service Care, Aatmaj Healthcare, Spectrum Talent Management, Sahana System, Anlon Technology, MOS Utility, Homesfy Realty etc.
  • SME IPO are much more risky and volatile than mainboard IPOs and may not be suitable at least for new retail investors.
  • Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

Leave a Reply