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Dr Lalchandani Labs BSE SME IPO review (May apply)

Review By Dilip Davda on April 19, 2018

Dr Lalchandani Labs Ltd. (LLL) is formed to set up, engage, collaborate, acquire, purchase, maintain, open collection centres, conduct, manage, administer, own, run laboratories for the purposes of carrying out pathological investigations of various branches of Bio-Chemistry, Hematology, Histopathology, Microbiology, Electrophoresis, , Virology, Cytology, other pathological Investigations and Immunoassay, Immuno-Histochemistry, Molecular Pathology, Dna & Genetic Testing etc.. LLL is a provider of diagnostic and related healthcare tests and services in Delhi/NCR. Through its integrated network, company offers patients and healthcare providers a broad range of diagnostic and related healthcare tests and services for use in core testing, patient diagnosis and the prevention, monitoring and treatment of disease and other health conditions. Its customers include individual patients, hospitals and other healthcare providers and corporate customers. Diagnostic healthcare testing is an essential element in the delivery of healthcare services, as it provides healthcare service providers with useful information for the diagnosis and treatment of diseases. Company is NABL Accredited Lab and has established itself within Delhi/NCR with 5 (Five) Self-Sufficient Labs and multiple collection centers. Company Incubates many Fully Automatic Machines from Only reputed Global suppliers like Siemens, Ortho (J&J), Trans Asia, GE etc. LLL is a conversion of partnership firm into a limited company post August 2017.

To part finance opening of second major processing centre, Repayment/prepayment of loans, purchase of advance machinery and equipments, opening of new collection centers, I.T. support system, operational expenses and general corpus fund needs,  LLL is coming out with a maiden IPO of 1400000 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 4.20 crore. Issue opens for subscription on 25.04.18 and will close on 27.04.18. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Navigant Corporate Advisors Ltd. and Cameo Corporate Services Ltd. is the registrar to the issue. Issue constitutes 32.31% of post issue paid up capital of the company. Having issued initial equity at par, it raised further equity at a price of Rs. 30 per share and has issued bonus shares in the ratio of 1 for 2 in January 2018. Average cost of acquisition of shares by the promoters is Rs. 6.67, Rs. 9.40 and Rs. 20.00 per share. Post issue, its current paid up capital of Rs. 2.93 cr. will stand enhanced to Rs. 4.33 cr.

On performance front, LLL has posted turnover/net profits of Rs. 1.41 cr. / Rs. 0.04 cr. (FY14), Rs. 1.93 cr. / Rs. 0.32 cr. (FY15), Rs.3.03 cr. / Rs. 0.32 cr. (FY16) and Rs. 4.62 cr. / Rs. 0.71 cr. (FY17). For the first 10 months of fiscal 2018 it has earned net profit of Rs. 1.06 cr. on a turnover of Rs. 4.11 cr. (with combine data of partnership and newly converted company).  As company was converted into a limited company in Fiscal 18, it has reported an EPS of Rs. 1.01 (not annualized). It has posted RoNW of 0.07 for the said period. Issue is priced at a P/BV of 1.97 on the basis of its NAV of Rs. 15.21 as on 31.01.18 and at a P/BV of 1.74 on the basis of post issue NAV of Rs. 17.31. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 10 thus issue appears reasonably priced. As per offer document it has no listed peers. Although on the basis of scale, they are not comparable in true sense, we may consider main board peers like Thyrocare, Dr. Lal Path that are trading at a P/E of around 38 and 43 (as on 18.04.18 closing).

On merchant banker’s front, this is the 12th mandate from its stable in last three fiscals and out of last 10 listings, 3 opened at discount, 1 at par and the rest with a premium ranging from 5% to 20% on the day of listings.

Conclusion / Investment Strategy

Analytical testing labs segment is doing better and set for bright prospects ahead. Investors may consider investment in this reasonably priced offer for long term.

Review By Dilip Davda on April 19, 2018

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: ).

Dr Lalchandani Labs IPO FAQs

  1. 1. Why Dr Lalchandani Labs IPO?

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

  2. 2. How is Dr Lalchandani Labs IPO?

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  3. 3. Dr Lalchandani Labs IPO what should investors do?

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

  4. 4. Is Dr Lalchandani Labs IPO good?

    Our recommendation for Dr Lalchandani Labs IPO is to subscribe for long term.

  5. 5. Is Dr Lalchandani Labs IPO worth Investing?

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

  6. 6. When will Dr Lalchandani Labs IPO allotment status?

    The Dr Lalchandani Labs IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Dr Lalchandani Labs IPO allotment status to check.

  7. 7. When will Dr Lalchandani Labs IPO list?

    The Dr Lalchandani Labs IPO will list on Wednesday, May 9, 2018, at BSE SME.