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Chandra Bhagat Pharma BSE SME IPO review (May apply)

Review By Dilip Davda on January 29, 2020

•    CBPL has asset-light business with third party contract manufacturing tie-ups.
•    The company is in the institutional marketing segment and thus has no OTC products.
•    Its top line shows growth, but the bottom line has inconsistency.
•    According to management, new product trials expenses attributed to such performance.
•    At the asking price, IPO is fully priced, discounting all near term prospects.

Chandra Bhagat Pharma Ltd. (CBPL), popularly known as CBC Pharma is in the marketing of life-saving medicines like Antibiotics, Antineoplastic, Cardiovascular, Hormones etc. The company markets its products under own brand name. The product portfolio has a major focus in injections - IV (Intravenous) & IM (Intramuscular), dry syrup, tablets and capsules. The company is meeting the requirements of Hospitals, Healthcare Centers, Government departments, NGOs directly or through distributors' channel. It also exports its products in 15 countries. However, its domestic sales contribute 92%-93% of total revenue.

CBPL has established presence in major therapeutic categories for formulations such as Anti-cancer (Oncology), Antibiotics, Anesthesia, Hormones, Orthopedic, Cardiac, Cardiovascular, Anti-fungal, Antiviral, Pediatrics, Cardiology, Nephrology, Neurology etc. It is also engaged in promoting and marketing of Active Pharmaceuticals Ingredients (API's) in India.

CBPL's pharma business operations are supported by various contract manufacturers having facilities which are approved by FDA/WHO and other relevant authorities. It follows Loan Licence Agreement/Contract Manufacturing Agreement with FDA/WHO approved vendors/manufacturers for a period ranging from one to five years. The company follows third party contract manufacturing thus it has an asset-light business model. It is purely in institutional market business and has no OTC (Over the Counter) products.

To part finance its plans for working capital needs (Rs. 7.00 cr.), setting up of distribution and warehousing centers (Rs. 1.50 cr.) and general corpus fund needs (Rs.0.95 cr.), CBPL is coming out with a maiden IPO of 2000000 equity shares of Rs. 10 each at a fixed price of Rs. 51 per share to mobilize Rs. 10.20 cr. The issue opens for subscription on 31.01.20 and will close on 06.02.20. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. This issue is solely lead managed by Beeline Broking Ltd while Link Intime India Pvt. Ltd. is the registrar to the issue. Beeline Broking Ltd. is also the market maker for this issue. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.51% of the post issue paid-up equity capital. The company is spending Rs. 0.75 cr. for this issue process.

Having issued initial equity at par, CBPL issued further equity shares in the price range of Rs. 40 to Rs. 210 between April 2003 and August 2019. It has also issued bonus shares in the ratio of 7 shares for every 1 share held in July 2019. The average cost of acquisition of shares by the promoters is Rs. 7.73 and Rs. 11.35 per share.

Post issue CBPL's current paid-up equity capital of Rs. 5.55 cr. will stand enhanced to Rs. 7.55 cr. The company is mulling market cap of Rs. 38.48 cr. with this issue.

For the last three fiscals, CBPL has posted turnover/net profits of Rs. 90.28 cr. / Rs. 0.66 cr. (FY17), Rs. 97.73 cr. / Rs. 1.04 cr. (FY18) and Rs. 106.72 cr. / Rs. 0.63 cr. (FY19). For the first four months ended on 31.07.19 of FY20, it has earned a net profit of Rs. 0.25 cr. on a turnover of Rs. 33.45 cr.

For the last three fiscals, CBPL has posted an average EPS of Rs. 1.94 and an average RoNW of 8.14%. The issue is priced at a P/BV of 2.02 on the basis of its NAV of Rs. 25.22 as on 31.07.19 and at a P/BV of 1.57 based on post issue NAV of Rs. 32.41.

While its top line has shown growth, its gross profit remains static and net profit marked inconsistency. According to management, this has been due to its spending on new product development, approval and clinic trials. It is now ready to launch HepA (Hepatitis A Vaccine) with the help of funds arising from the proposed IPO. It has up the sleeve launch of Inactivated Polio Vaccine (IPV), Pneumococcal Vaccine and Varicella Vaccine in the coming few years. Thus its future prospects appear bright.

If we annualize the latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 51+. Thus the issue is aggressively priced discounting near term positive factors.

As per offer documents, CBPL has shown Earum Pharma and Vaishali Pharma as its listed peers. They are currently trading at a P/Es of around 16.36 and 49 (as on 29.01.20). However, they are not strictly comparable.

On lead manager front, this is the 4th mandate from its stable in the last two fiscals (including the ongoing fiscal). For the last 3 listings, all opened at a premium ranging from 1.67% to 10.00% on the day of listing.

Conclusion / Investment Strategy

CBPL has shown inconsistency in bottom lines despite growing top lines. With the vaccine product launch plans up the sleeve, it is poised for bright prospects as claimed by the management. However, all these positive factors are discounted in the asking price. Hence only cash surplus, risk savvy investors may consider investment for long term at their own risk.

Review By Dilip Davda on January 29, 2020

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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. 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 their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.

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.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).


  1. 1. Why CBC Pharma IPO?

    The initial public offer (IPO) of Chandra Bhagat Pharma Ltd offers an early investment opportunity in Chandra Bhagat Pharma Ltd. A stock market investor can buy CBC Pharma IPO shares by applying in IPO before Chandra Bhagat Pharma Ltd shares get listed at the stock exchanges. An investor could invest in CBC Pharma IPO for short term listing gain or a long term.

  2. 2. How is CBC Pharma IPO?

    Read the CBC Pharma IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. CBC Pharma IPO what should investors do?

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

  4. 4. Is CBC Pharma IPO good?

    Our recommendation for CBC Pharma IPO is to subscribe for long term.

  5. 5. Is CBC Pharma IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the CBC Pharma IPO.

  6. 6. When will CBC Pharma IPO allotment status?

    The CBC Pharma IPO allotment status will be available on or around February 11, 2020. The allotted shares will be credited in demat account by February 13, 2020. Visit CBC Pharma IPO allotment status to check.

  7. 7. When will CBC Pharma IPO list?

    The CBC Pharma IPO will list on Friday, February 14, 2020, at BSE SME.


1. K joshi     Link|January 29, 2020 2:41:44 PM
Being Pharma company less known to general public, with study show that they are second generation promoters and experience in Pharma for 40 years.

Introduce Hep A vaccine having huge market is giving boost to sales and profit in future.
Considering financial ipo investment for long term will consider.