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Ganga Pharmaceuticals BSE SME IPO review (Avoid)

Review By Dilip Davda on Jan 19, 2016

Ganga Pharmaceuticals Ltd (GPL) is a producer of quality bulk ayurvedic medicines in Mumbai. Apart from manufacturing, the company is also into marketing, distribution of Bulk Ayurvedic Medicines. Its product includes Ampachan Vati; Khadira Vati; Nirmalaya churna etc.  Its products are available in liquid dosage form and solid dosage forms.

To part finance its production expansion, marketing and brand building and general corpus funds needs, GPL is coming out with a maiden IPO of 1024000 equity share of Rs. 10 each at a fixed price of Rs. 15 per share to mobilize Rs.1.54 crore. Issue opens for subscription on 29.01.16 and will close on 09.02.16. Minimum application is to be made for 8000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is lead managed by First Overseas Capital Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. Since inception till 2013 it issued all equity at par and then issued bonus shares in the ratio of 1 share for every 10 shares held in April 2015 and then issued 480000 equity shares at a price of Rs. 12 per share in May 2015. Its current paid up equity capital of Rs. 3.04 crore will stand enhanced to Rs. 4.06 crore post issue. This issue constitutes 25.21% dilution of post issue equity of the company.

On performance front, the company has posted turnover and net profit of Rs. 1.97 cr. /Rs. 0.02 cr. (FY12), Rs. 2.36 cr. /Rs. 0.026 cr. (FY13), Rs. 2.81 cr. /Rs. 0.03 cr. (FY14) and Rs. 2.87 cr./ Rs. 0.034 cr. respectively. For first six months ended 30.09.15 it has reported net profit of Rs. 0.047 cr. on a turnover of Rs. 1.29 cr. If we attribute these earnings on annualized basis on fully expanded equity post IPO then the asking price is at a P/E of 65 plus. Thus issue is aggressively priced.

Merchant banker has poor track record.


Conclusion / Investment Strategy

Issue is aggressively priced. Only risk savvy investors may consider investment for long term.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jan 19, 2016

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

Ganga Pharmaceuticals IPO FAQs

  1. 1. Why Ganga Pharmaceuticals IPO?

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

  2. 2. How is Ganga Pharmaceuticals IPO?

    Read the Ganga Pharmaceuticals IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Ganga Pharmaceuticals IPO what should investors do?

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

  4. 4. Is Ganga Pharmaceuticals IPO good?

    Our recommendation for Ganga Pharmaceuticals IPO is to avoid.

  5. 5. Is Ganga Pharmaceuticals IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Ganga Pharmaceuticals IPO.

  6. 6. When will Ganga Pharmaceuticals IPO allotment status?

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

  7. 7. When will Ganga Pharmaceuticals IPO list?

    The Ganga Pharmaceuticals IPO will list on Monday, February 22, 2016, at BSE SME.