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Valiant Laboratories IPO entails to raise₹152.46 Cr and the issue comprises entirely a fresh issue of shares. Valiant Laboratories Limited is a pharmaceutical ingredient manufacturing company with focuses on manufacturing Paracetamol.

About Valiant Laboratories Limited:

• Valiant Laboratories Limited is an Active Pharmaceutical Ingredient (“API”) / Bulk Drug manufacturing company having focus on manufacturing of Paracetamol.
• Bulk drugs/Active Pharmaceutical Ingredients (API) serve as raw materials for manufacturing finished dosage forms or formulations.
• Paracetamol (Scientific name: Acetaminophen or para-hydroxyacetanilide – C8H9NO2), is one of the most commonly taken analgesic worldwide and is recommended as the first-line therapy in pain conditions by the World Health Organization (WHO).
• Paracetamol has several applications such as usage in treatment of headaches, muscle aches, arthritis, back aches, toothaches, cold and fever.
• It manufactures Paracetamol in various grades such as IP/BP/EP/USP, as per the pharmacopeia requirements of customers.
• Their manufacturing facility is located at Boisar, Palghar which is spread over an aggregate parcel of land admeasuring about 2,000 sq. mts. with an aggregate annual total installed capacity of 9,000 MTPA. Within the Manufacturing Facility they have in-house R&D infrastructure .
• Valiant Laboratories Limited, through their wholly owned subsidiary, Valiant Advanced Sciences Pvt Ltd intends to establish a greenfield project at Bharuch, Gujarat, which shall be spread over an aggregate parcel of land admeasuring about 57,766 sqm.. and shall manufacture specialty chemicals such as ketene and diketene derivative products.

Financials: Valiant Laboratories Limited

Anchor: Valiant Laboratories IPO

Valiant Laboratories IPO: Salient Points

• Paracetamol API industry is expected to clock a CAGR of 5-7% between fiscal 2023 and fiscal  2027,  largely  driven  by  the  demand   from  domestic   formulation  manufacturers  as  well  as export markets.
• The pharmaceutical API industry in India is ranked 3rd largest globally in terms of volume, behind China and Italy.
• The company is owned (46% stake) by Valiant Organics Limited (Aarti Industries and Aarti Pharmalabs, Aarti Drugs etc).
• Of the net proceeds, Capex – Rs. 80 cr for Green field expansion, Rs. 45 cr towards Working Capital.
• to improve the operational efficiencies, Valiant intends to implement backward integration measures by manufacturing ketene and diketene derivative products. They will consume one of such derivative products as a raw material.
• Company is going for backward integration i.e. acetic anhydride which is used in the process of manufacturing paracetamol. These backward integration measures will allow them to gain competitive advantage by reducing in product costs, control over supply of raw materials, minimising supply failure risk and reduce their dependency on third parties.
• It is reducing it dependency on China for RM which is now only 12% and will be nil by 2025-26.
• Company is rated A-/Stable by Crisil.
• Company is undertaking a massive capex of Rs. 266 cr for backward integration and product diversification.
• Valiant seeks to enhance their presence in international geographies, including regulated markets where their strategy is primarily to become the preferred supplier of Paracetamol API to pharmaceutical companies.
• Valiant has experienced promoter and strong management team with a legacy of 4 decades.
• Peers on broad parameters

• All peers mentioned are not comparable. Granules comes bit close. It is a much larger and better company with better margins than Valiant Laboratories. IOL Chemicals & Pharmaceuticals Ltd which is largest player of ibuprofen trades at PE of 18.5x.
• Revenue from operations grew at a CAGR of 23.90% between Fiscal 2017 and Fiscal 2023.
• Its profit after tax, grew at a CAGR of 26.81% between Fiscal 2017 and Fiscal 2023.
• Margins have got impacted as the price of raw materials have increased.
• Valiant Laboratories IPO is coming at a PE ratio of 21x(fy23 earnings).
• Iam neutral on Valiant Laboratories IPO as little is left on table. However I intend to apply in the IPO. This is more based on its lineage (aarti group) and its expansion plans.
• GMP as reported on social media has been around Rs.10-15.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in 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.