Zenith Drugs IPO (NSE SME) Overview

Zenith Drugs is in the pharma business with manufacturing and trading activities with a good focus on ORS products. Zenith Drugs IPO intends to raise ₹40.68 Cr. entirely as fresh issue of 5148800 equity shares of Rs. 10 each.

IPO opensFeb 19, 2024
IPO ClosesFeb 22, 2024
IPO Size (Rs.)₹40.68 Cr
IPO Size (s hares)5,148,800 shares
BreakupFresh issue only
Face Value:₹ 10
IPO Price in Rs :₹75 to ₹79 per share
Minimum Lot1600 Shares
Listing AtNSE SME
Anchor, MM & QIB58%
NII Quota~13%
Retail Quota~29%
 Lead ManagerGretex Corporate Services
RegistrarBigshare Services Pvt Ltd
Market makerGretex Share Broking.

About Zenith Drugs:

  • They are a pharmaceutical manufacturing and trading company based out from Indore.
  • They have a manufacturing unit, specialized in manufacturing high quality and affordable Medicines.
  • Company is also into Generic Medicines.
  • They are are WHO-GMP compliant,
  • Zenith offers a wide range of formulations in various forms such as:
    • ORS Powder;
    • Liquid Orals;
    • Ointments;
    • Liquid Externals; and
    • Capsules.
  • In 2007, they expanded their product line by incorporating ORS Powder manufacturing into their operations. This addition enabled them to contribute to the critical healthcare need for oral rehydration solutions.
  • In 2016, they established present manufacturing facility, which holds WHO GMP certification. This state-of-the-art facility is equipped with advanced technologies and processes to meet the highest quality standards in pharmaceutical manufacturing.
  • In 2019, they again expanded their product line by introducing liquid externals and capsules, further widening the portfolio.
  • Zenith is promoted by Mr. Bhupesh Soni, Mr. Sandeep Bhardwaj, and Mr. Ajay Singh Dassundi.

Financials: Zenith Drugs IPO

Particulars (₹ in cr.)2023 (06)2023 (12)2022 (12)2021 (12)
Total Income6,948.4311,569.659,266.637,351.57
Profit after Tax540.55515.33313.82302.92
Total Borrowings2,902.812,605.031,880.861,548.11
Share Capital1,200.00404040
Reserves and surplus1,064.961,684.421,169.09855.27
Networth2,264.961,724.421,209.09895.27
Basic & Diluted EPS4.54.292.622.52
Return on Networth (%)23.8729.8825.9633.84
Post issue Share Capital1715   
FV10.0   
IPO price79.0   
EPS Fy233.0   
PE Fy2326.3   
EPS Fy24 (annualized)6.3   
PE Fy24  (annualized)12.5   
Market cap in cr13,548.5   
Market cap / Sales1.17   

Zenith Drugs IPO: Anchors

Zenith Drugs IPO: Salient Points

  • Company intends to utilize the Net Proceeds the net proceeds of the IPO funds for these objectives. It will use Rs. 10.61 cr. for purchase of machinery and other equipment for setting up of new unit, Rs. 2.11 cr. towards upgradation of existing unit, Rs. 12 cr. for working capital, and the rest towards general corporate purposes.
  • Company is in process to establish a new factory at its land located at Depalpur, Indore,to expand its operations. The said land is adjacent to the current factory of the Company.
  • Company sells its products under its own Brand Name in India and for International Markets they sell through third party registration, however, Zenith is named as producer for the third party sale.
  • Majority of their revenue is dependent on two products i.e., ORS Powder and Liquid Orals (paracetamol etc.) amounting 22.28% and 39.31% respectively of the total sales of the Company.
  • Product wise sale
Year% ORS Powder% Liquid Orals% Ointments% Liquid Externals% Capsules
FY 2020-202118.3837.9122.239.8811.60
FY 2021-202219.8437.5321.758.5612.32
FY 2022-202322.2839.3124.924.1209.37
  • Zenith has successfully participated in government and tender business for the past few years, collaborating with major state and central government institutions and corporations, including
    • Madhya Pradesh Public Health Services Corporation Limited,
    • Rajasthan Medical Services Corporation Limited,
    • Telangana State Medical Services and Infrastructure Development Corporation,
    • Employees’ State Insurance Corporation
    • Odisha State Medical Corporation Limited and more.
  • Major portion of revenue for the Financial Year ended March 31, 2023, March 31, 2022 and March 31, 2021 is from only one customer i.e. Government Institutions. 43.36% of Revenue in Fiscal 2022-2023, 52.36% of Revenue in Fiscal 2021-2022 and 53.02% of Revenue in Fiscal 2020-2021 was from sales to Government institution.
  • Alrady doing White labelling for Alkem, Microlabs, Ajanta Pharma etc.
Year% Sale Under Own Brand% White Label Manufacturing% Sales to Government% of Trading% of Export through Third Party Route% Others
FY 20-2125.621.2353.020.000.150.00
FY 21-2223.5223.8652.360.000.260.00
FY 22-23 21.5425.5043.366.802.500.40
  • In addition to direct sales of products to end user customers, they have an extensive dealer network covering major parts of India.
  • Key Performance Indicators of Company
Key Financial PerformanceSeptember 30, 2023FY 2022-23FY 2021-22FY 2020-21
Revenue from operations6,940.9311,451.919,165.507,340.17
EBITDA959.82967.14683.12702.82
EBITDA Margin13.83%8.45%7.45%9.57%
PAT540.55515.33313.82302.92
PAT Margin7.79%4.50%3.42%4.13%
Networth2,264.961,724.421,209.09895.27
RoE %27.10%35.13%29.83%40.73%
RoCE% 28.71%37.29%30.08%36.52%
  • They are seeeting upo a tablet manufacturing unit. donot have table manufacturing unit toill now. This will ghelp them to grow 30-40% per year as per management and also allow them to export.
  • They are eying many African and south American markets for Exports and are working in that direction.
  • Company claims that it may be the largest ORD Sachet manufacturer and supplies to state govts against tenders.
  • Peers: RHP shows Sudarshan Pharma and Sigachi Ind. as their listed peers. They are trading at a P/E of 20, and 54. They are much bigger and diversified companies and so com[parison is only symbolic.
  • They have attributed jump in profits in H1Fy24 to softening of raw material prices which were elevated after COVID.
  • Zenith Drugs IPO is coming at a PE ratio of 26.3x(fy23 earnings) and 12.5x (fy24 annualized earnings)
  • I intend to apply in Zenith Drugs IPO subject to availability of funds. Looks an average issue.
  • GMP as reported on social media has been Rs. 18 .
  • Gretex Corporate Services Limited is the Lead Manager with a fair to good record. Past issues handled by them include AMIC Forging Limited, Kalyani Cast Tech Ltd, Transteel Seating Technologies Limited, Shelter Pharma Limited, Comrade Appliances Limited, Innokaiz India Limited Retina Paints Limited, Sudarshan Pharma Industries, ResGen Limited, Reetech International Cargo and Courier Ltd, Steelman Telecom Limited, Shantidoot Infra Services.
  • SME IPO are much more risky and volatile than mainboard IPOs.
  • 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.

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