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Achyut Healthcare BSE SME IPO review (Avoid)

Review By Dilip Davda on Mar 14, 2022

•    AHL is in the business of trading in pharmaceutical products. 
•    It is fully dependent on third party contracts. 
•    Till FY21 it marked minuscule financial performance. 
•    Superb top and bottom line for IPO year raise eyebrows. 
•    There is no harm in ignoring this pricy offer. 

ABOUT COMPANY:
Achyut Healthcare Ltd.(AHL) is engaged in the trading of pharmaceutical products. It is currently trading into 6 to 7 products based on the needs of its customers. The list of pharma products traded includes Cenzure, Arpimune, Azathioprine IP, Everomimus, Mycophenolate Mofetil USP, Mycophenolate Sodium USP, Sirolimus, Tacrolimus USP, Infrared thermometer, Ascorbic Acid Coated Vitamin C, Calcium carbonate oyster, Cellulose acetate Phthalate, Chlorthalidone IP, Cross Carmalose Sod IP/USP, DI Basic Calcium Phosphate IP, DI Ethyl Phthlate, Diltiazem Hydrochloride IP, Easy Coat Fc Titanium Dioxide, Escitalopram IP, Escitalopram Oxalate, Favipiravir among many other products.

As per the statement given on page 87 of the offer document the company is into the growing stage where it is currently having fewer employees and for that reason no such HR Policies are in place right now but will be in place once we expand.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its need for funding of machinery and equipment purchase (Rs. 2.76 cr.) and general corporate purpose (Rs. 0.59 cr.), AHL is coming out with its maiden IPO of 1800000 equity shares of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 3.60 cr. The issue opens for subscription on March 17, 2022, and will close on March 22, 2022. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.70% of the post issue paid-up capital of the company. AHL will be spending Rs. 0.25 cr. for this IPO process. 

The issue is solely lead managed by GYR Capital Advisors Pvt. Ltd., and KFin Technologies Ltd. is the registrar to the issue. Giriraj Stock Broking Pvt. Ltd. is the market maker for this company. 

Having issued initial equity at par, the company further equity at Rs. 20 per share in September 2021 and October 2021. It has also issued bonus shares in the ratio of 9 for 10 in September 2021. The average cost of acquisition of shares by the promoters is Rs. 9.85 and Rs. 10.15 per share. 

Post-IPO, AHL's current paid-up equity capital of Rs. 4.94 cr. will rise to Rs. 6.74 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 13.48 cr. 

FINANCIAL PERFORMANCE: 
On the financial performance front, for the last three fiscals, AHL has posted turnover/net profits of Rs. 0.67 cr. / Rs. - (0.015) cr. (FY19), Rs. 0.35 cr. / Rs. 0.014 cr. (FY20) and Rs. 0.27 cr. / Rs. 0.007 cr. (FY21). For the first half of FY22 ended on September 30, 2021, it has earned a net profit of Rs. 0.13 cr. on a turnover of Rs. 2.73 cr. Quantum jump in the top and bottom lines in the IPO year indicates some window dressing for fancy valuations. 

For the last three fiscals, AHL has reported an average EPS of Rs. 0.24 and an average RoNW of 2.69%. The issue is priced at a P/BV of 1.97 based on its NAV of Rs. 10.17 as of September 30, 2021, and at a P/BV of 1.47 based on its post-IPO NAV of Rs. 13.56. 

If we annualize super earnings of FY22 and attribute it to post IPO fully diluted paid-up equity, then the asking price is at a P/E of 54.05 making it a highly-priced offer. 

COMPARISON WITH LISTED PEERS:
As per offer documents, AHL has shown Earum Pharma, Vaishali Pharma and Chandra Bhagat Pharma as its listed peers. They are currently quoting at a P/E of around 00, 25.02 and 00 (as of March 14, 2022). However, they are not truly comparable on an apple-to-apple basis. 

DIVIDEND POLICY:
The company has not paid any dividend for the reported period in the offer document. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

MERCHANT BANKER'S TRACK RECORDS: 
The Lead Manager of this IPO started its business in this fiscal (i.e. 2021-22) only and this is the third mandate from its stable. The last two listings have marked listings at a premium ranging from 4.05% to 6.15% on debut day.


Conclusion / Investment Strategy

The company has posted minuscule financial performances till FY21 and has marked bumper top and bottom line for the first half of the current fiscal. Since the company is having third party trading activity, sustainability of such performance going forward is a major concern. Even with this super current earning, its asking price is at a P/E of 54 making it a costly bet. There is no harm in ignoring this pricy offer.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Mar 14, 2022

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

achyut-healthcare-ipo FAQs

  1. 1. Why achyut-healthcare-ipo?

    The initial public offer (IPO) of Achyut Healthcare Limited offers an early investment opportunity in Achyut Healthcare Limited. A stock market investor can buy achyut-healthcare-ipo shares by applying in IPO before Achyut Healthcare Limited shares get listed at the stock exchanges. An investor could invest in achyut-healthcare-ipo for short term listing gain or a long term.

  2. 2. How is achyut-healthcare-ipo?

    Read the achyut-healthcare-ipo recommendations by the leading analyst and leading stock brokers.

  3. 3. achyut-healthcare-ipo what should investors do?

    achyut-healthcare-ipo offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the achyut-healthcare-ipo Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is achyut-healthcare-ipo good?

    Our recommendation for achyut-healthcare-ipo is to avoid.

  5. 5. Is achyut-healthcare-ipo worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the achyut-healthcare-ipo.

  6. 6. When will achyut-healthcare-ipo allotment status?

    The achyut-healthcare-ipo allotment status will be available on or around Mar 25, 2022. The allotted shares will be credited in demat account by Mar 29, 2022. Visit achyut-healthcare-ipo allotment status to check.

  7. 7. When will achyut-healthcare-ipo list?

    The achyut-healthcare-ipo will list on Wednesday, March 30, 2022, at BSE SME.