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Genpharmasec RI review (May apply)

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•    GPL is engaged in the distribution of third party products.
•    It has posted fluctuating top and bottom lines for the reported periods. 
•    The current market price is not in line with its financial performance. 
•    The current traded price appears to be well managed price to lure investors. 
•    Well-informed investors may park funds; others may stay away. 

Genpharmasec Ltd. (GPL) - erstwhile known as Adi Rasayan Ltd., later rechristened as Generic Pharmasec Ltd., and now known as Genpharmasec Ltd., is engaged in the distribution of lucrative medical and diagnostics device segment. 

It has tied up with Abbott Point of Care Corporation INC, USA for distribution of their niche diagnostic equipment namely, i-STAT 1 Analyzer which is a hand-held blood analyzer exclusively used in ICUs and ICCUs of hospitals for immediate test results. i-STAT 1 Analyzer is lightweight, portable and easy to use. It operates with the advanced technology of i-STAT test cartridges. Together they create the i-STAT system - a point-of-care-testing platform that provides healthcare professionals with diagnostic information when and where it is needed. 

GPL supplies i-STAT 1 blood Analyzers to various distributors spread all over the country. These distributors supply the same to various government as well as private hospitals in their territory. As of the date of filing this offer document, it had 8 employees on its payroll. 

The company is coming out with Right Issue (RI) of 276859850 equity share of Re. 1 each at a fixed price of Rs. 1.75 per share to mobilize Rs. 48.45 cr. The RI is opening for subscription on January 22, 2024, and will close on February 09, 2024. The company is offering RI in the ratio of 1 for 1 to eligible stakeholders as of the record date of January 09, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.25 cr. for this RI process, and from the net proceeds, it will utilize Rs. 14.43 cr. for acquiring shares from shareholders of Derren Healthcare Pvt. Ltd. to make it a subsidiary, Rs. 5.88 cr. for repayment of certain borrowings of the company, Rs. 16.50 cr. for working capital and Rs. 11.39 cr. for general corporate purposes.  

The RI is self-managed by the company itself and Purva Sharegistry (India) Pvt. Ltd. is the registrar of the issue and Navigant Corporate Advisors Ltd. is the advisor. 

Post-RI, company's current paid-up equity capital of Rs. 27.69 cr. will stand enhanced to Rs. 55.37 cr.  Based on the RI pricing, the company is looking for a market cap of Rs. 96.90 cr. 

On the financial performance front, for the last two fiscals, the company has posted a total revenue / net profit / - (loss) of Rs. 27.41 cr. / Rs. - (0.21) cr. (FY22), and Rs. 26.52 cr. / Rs. 1.13 cr. (FY23). 

As per the exchange filing, for the first half of FY24 ended on September 30, 2023, it earned a net profit of Rs. 0.03 cr. on a total revenue of Rs. 14.09 cr. Thus it has posted inconsistency in its top line with wild fluctuations in the bottom lines. 

The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 8.71 on January 08, 2024, and opened on an ex-right basis at Rs. 5.00 on January 09, 2024. Since then, it has marked a high/low of Rs. 7.31 / Rs. 4.86. The scrip last closed at Rs. 6.30 as of January 17, 2024. For the last 52 weeks' it has posted a high/low of Rs. 7.31 / Rs. 1.61. The counter is currently under ESM Stage 2. 

The promoters' holding has been constant at 59.96% for the last three quarters ended with December 31, 2023. The counter is well managed above the RI price to tempt investors.

Conclusion / Investment Strategy

Though this RI is at a discount of around 72% based on its last traded price of Rs. 6.30, it appears to be a manipulated price to pave the way for RI. The financial performance is not in line with its prevalent traded price. The company operates on a third party product supplied. Well-informed investors consider parking of funds, while others may avoid it.

Review By Dilip Davda on January 17, 2024

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: ).

More Genpharmasec Limited RI Views / Analysis / Recommendations ...

The Genpharmasec Rights Issue 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Genpharmasec Rights Issue 2024 worth investing. The Genpharmasec Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Genpharmasec Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Genpharmasec Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.