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Review By Dilip Davda on November 4, 2016

Greensignal Bio Pharma Ltd (GSBPL) is one of the four companies worldwide who have been WHO-prequalified to supply the BCG vaccine to UNICEF. In fact, this is the second company from India to get such pre-qualification besides Serum of Pune. GSBPL has secured a long term arrangement dated November 23, 2015 with UNICEF to supply the BCG vaccine to UNICEF subject to the purchase orders placed with the company. It also supplies the BCG vaccine to the Ministry of Health, India pursuant to the tendering process. The company has been successful in obtaining bids for the years 2009-2010, 2010-2011, 2011-12, 2012-13 and 2015-2016. It also supplies the BCG vaccine to Indonesia, and Nepal which are countries outside the UNICEF ambit. GSBPL’s BCG-ONCO for Immunotherapy drug is distributed throughout India vide commercial arrangements in India and the company intend to market this immunotherapy drug in overseas jurisdictions as well. Presently, it has made several limited supplies to various countries such Lebanon, Saudi Arabia, Turkey and Switzerland.

GSBPL is an Indian vaccine manufacturing company with global operations. As on date it produces two products i.e. BCG Vaccine for immunization against Tuberculosis and BCG-ONCO for Immunotherapy (Freeze Dried) BP for the treatment of Urinary Bladder Carcinoma and the brand name for the same is =Urovac‘. As both vaccines produced by it are generic drugs it does not require any patents for the same, however, the company have procured a registered trademark for BCG ONCO for Immunotherapy drug, name, =Urovac‘. Therefore, Company has not applied for any patent and no patent is registered.

The global vaccines market is expected to reach USD57bn by 2019 from USD33bn in 2014, growing at a CAGR of 11.8% from 2014 to 2019. Among various end users, the pediatrics segment is expected to account for the largest share of the market with highest CAGR growth during 2014 to 2019. On the back of strong focus of the Government on increasing the immunization activities across the country, increasing awareness, availability of affordable vaccines, the Indian vaccine industry is expected to continue to grow at a CAGR of 12-15% over the next five years. India is one of the largest manufacturers and exporters of vaccines world-wide, with 12 major vaccine manufacturing facilities. These vaccines are used for the national and international markets (150 countries), which makes India a major vaccine supplier across the globe. UN agencies and partnerships such as UNICEF, UNFPA, UNITAID, the Global Fund and the GAVI Alliance facilitate the supply of life-saving quality assured medicines and vaccines to millions of patients in resource-limited countries across the world. These agencies only buy products that have been through the WHO Prequalification Scheme, which ensures that medicines, vaccines and diagnostics meet international standards of quality, safety and efficacy. India has about seven vaccine manufacturers producing 67 prequalified vaccines (dosage forms). Currently 16 vaccines are prequalified by WHO and exported through United Nations agencies. More than 70% of all measles vaccines used globally are produced in India. Nearly a third of prequalified vaccines, and over two thirds of medicines purchased through these international organizations are produced in India.

GSBPL’s business is organized into domestic (i.e. Indian) and international operations, according to the geographies in which it operates. For fiscal year 2016, company’s domestic and international operations accounted for 53.80% and 46.20%, respectively, of its net revenues from operations. Its manufacturing facility is located at Pappankuppam Village, Gummidipoondi, Tiruvallur District, Tamil Nadu equipped with advanced equipment dedicated for the manufacturing of live attenuated BCG Vaccine and the BCG-ONCO for immunotherapy.

For listing benefits and providing exit to the existing stakeholders, the company is coming out with a maiden IPO of 14579560 equity share of Rs. 10 each as “offer for sale” via book building route in a price band of Rs. 76-80. The company intends to mobilize Rs. 110.80 cr. to Rs. 116.64 crore (based on lower and upper price bands). Issue opens for subscription on 09.11.16 and will close on 11.11.16. Minimum application is to be made for 175 shares and in multiples thereon, thereafter. Issue is solely managed by Indian Overseas Bank and Bigshare Services Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 38% dilution of its current fully paid up equity. Retail portion is just 10% of the issue size.

On performance front, its consolidated net revenues from operations grew at a CAGR of 210.70% in the period from fiscal year 2015 to fiscal year 2016. However, it posted inconsistent top line with losses for the previous four fiscals i.e. from 2011-12 to 2014-15. For the fiscal 2015-16 it has posted net profit of Rs. 5.31 crore on a turnover of Rs. 20.49 crore. For Q1 of current fiscal it has earned net profit of Rs. 2.93 crore on a turnover of Rs. 10.21 crre. Between 2005 and 2011 it issued equity shares at a price ranging from Rs. 10 to Rs. 50 per share. In March 2016 it issued equity at a price of Rs. 80 and has also issued bonus in the ratio of 3 for 2 in May 2016. Its current paid up capital of Rs. 38.37 crore will remain same as the issue is secondary. If we attribute the latest earnings on annualized basis on the current equity, then asking price is at a P/E of around 25. It has no listed peer to compare with. For past losses, it claims that due to its ongoing investments during that period, it posted such odd performance, but now that everything is in place, it will not need major funds for immediate future and is now on the threshold of posting improved performance as indicated for FY 16 and Q1 of current fiscal.

On merchant banker’s front, as per RHP it has just one IPO in last three years that has given some reward on the listing day.

Conclusion: This Company will enjoy first mover advantage in the important generic vaccine sector and will attract fancy going forward. Moderate investment may be considered for long term rewards as the issue size is small and will attract T segment listing for initial period due to which, short term rewards unlikely.

Conclusion / Investment Strategy

This Company will enjoy first mover advantage in the important generic vaccine sector and will attract fancy going forward. Moderate investment may be considered for long term rewards as the issue size is small and will attract T segment listing for initial period due to which, short term rewards unlikely.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on November 4, 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 the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda, a freelance journalist

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: ).

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