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Trident Lifeline BSE SME IPO review (Avoid)

Review By Dilip Davda on Sep 22, 2022

•    TLL is engaged in pharma product distribution and third-party manufacturing contracts.
•    It has posted bumper results for FY22.
•    Based on FY22 earnings, the issue is aggressively priced. 
•    There is no harm in skipping this pricy issue. 

ABOUT COMPANY:
Trident Lifeline Ltd. (TLL) is engaged in the pharmaceutical business ethical marketing in domestic as well as international markets. It is also engaged in the distribution of pharmaceutical products through the third-party distribution network. The company offers a wide range of pharmaceutical formulations and products manufactured on contract manufacturing under a loan license. TLL operates in India as well as African, Latin American and East Indian Countries. 

TLL deals in Capsules, Tablets, Liquid Ointment, Gel, Ice Gel, Mouthwash, Paste, Solution, Suspension, Dry powders, and Toothpaste. Its product portfolio comprises a wide range of drugs like Anti-Bacterial, Anti Diarrheal, Anti-Fungal, Anti Malerial, Anti Diabetic, Dental Cure, Proton Pump Inhibitor, Anti Protozol, Anti Histamine, Anti-Hypertensive drugs, Anti Lipidemic Drug, Anti Parasitic, Multivitamin, Multimineral Nyteraceutical and Non-steroidal anti-inflammatory drug (NSAIDS). TLL's product portfolio consists of 832 products, as on May 31, 2022. It operates under different brand names across the globe. As on May 31, 2022, it had 267 products registered in a total of 8 countries. As on May 31, 2022, a total of 565 products are under the process of registration in 11 countries.

Currently, TLL is engaged in the business of marketing pharmaceutical products. It has obtained necessary approvals from FDA for getting the manufacture of formulation by contract manufacturers on Loan License or on a principle-to-principle basis. It also takes the necessary Trademark approvals & registrations wherever required. As of May 31, 2022, it had 30 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its need for working capital (Rs. 20.50 cr.), expenses for product registration in international markets (Rs. 5.14 cr.), and general corporate purposes (Rs. 6.70 cr.), TLL is coming out with a maiden IPO of 3499200 equity shares of Rs. 10 each at a fixed price band of Rs. 101.00 per share to mobilize Rs. 35.34 cr. The issue opens for subscription on September 26, 2022, and will close on September 29, 2022. The minimum application is to be made for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 30.43% of the post-IPO paid-up equity capital of the company. The company is spending Rs. 3.00 cr. for this IPO process. This indicates the fully structured nature of the IPO. 

The issue is solely lead managed by Beeline Capital Advisors Services Pvt. Ltd., and Link Intime India Pvt. Ltd. is the registrar to the issue. Sunflower Broking Pvt. Ltd. is the market maker for the company. 

The company has issued/converted entire equity shares at par so far. The average cost of acquisition of shares by the promoters is Rs. 10.00 per share. 

Post this IPO, TLL's paid-up equity capital of Rs. 8.00 cr. will stand enhanced to Rs. 11.50 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 116.14 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, TLL has (on a standalone basis) reported a turnover/net profit - (loss) of Rs. 5.01 cr. / Rs. - (0.80) cr. (FY20), Rs. 9.78 cr. / Rs. 0.63 cr. (FY21), and Rs. 22.37 cr. / Rs. 2.27 cr. (FY22). On a consolidated basis, it earned a net profit of Rs. 2.25 cr. on a turnover of Rs. 22.37 cr. for FY22. Super earnings in a pre-IPO year appear to be a window dressing. 

For the last three fiscals, TLL has posted an average EPS of Rs. 1.98 and an average RoNW of NA%. The issue is priced at a P/BV of 16.83 based on its NAV of Rs. 6.00 as of March 31, 2022, and at a P/BV of 2.89 based on its post-IPO NAV of Rs. 34.91 per share. 

If we attribute FY22 earnings on post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 51.53. Thus the issue is aggressively priced. 

COMPARISON WITH LISTED PEERS:
As per the offer documents, TLL has shown Vaishali Pharma and Chandra Bhagat Pharma as their listed peers. They are currently quoting at a P/E of 21.86, and 100.24 (as of September 22, 2022).  However, they are not truly comparable on an apple-to-apple basis. 

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

MERCHANT BANKER'S TRACK RECORD:
This is the 4th mandate from Beeline Capital in the current fiscal. Out of the last 2 listings, both opened with premiums ranging from 38.89% to 63.64% on the day of listing. 


Conclusion / Investment Strategy

TLL is operating in a highly competitive segment with third-party contract manufacturing. Based on FY22 earnings, the issue is aggressively priced. There is no harm in skipping this pricy issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 22, 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

Trident Lifeline IPO FAQs

  1. 1. Why Trident Lifeline IPO?

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

  2. 2. How is Trident Lifeline IPO?

    Read the Trident Lifeline IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Trident Lifeline IPO what should investors do?

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

  4. 4. Is Trident Lifeline IPO good?

    Our recommendation for Trident Lifeline IPO is to avoid.

  5. 5. Is Trident Lifeline IPO worth Investing?

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

  6. 6. When will Trident Lifeline IPO allotment status?

    The Trident Lifeline IPO allotment status will be available on or around Oct 4, 2022. The allotted shares will be credited in demat account by Oct 7, 2022. Visit Trident Lifeline IPO allotment status to check.

  7. 7. When will Trident Lifeline IPO list?

    The Trident Lifeline IPO list date is not yet available. The Trident Lifeline IPO is planned to list on Oct 10, 2022, at BSE SME.

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