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Wednesday, April 12, 2006

Paras Pharma plans IPO in July

Paras Pharmaceuticals, the makers of OTC products like Moov, Borosoft, Dermicool, Itchguard, Krack, D’Cold and Stopache, will go public around July this year, reports The Economic Times.

Paras has appointed Enam Securities to manage its initial public offer, IPO and “the spadework has already begun”, one of the company’s promoters told.

The Ahmedabad-based company, which has pioneered the concept of creating successful brands of personal care and OTC drug products, will make an offer of 20 lakh equity shares, through a mix of fresh offer and sale of promoters’ equity. The company chairman Girish Patel told that there would be a fresh offer of 12.5 lakh shares, while the promoters would offload 7.5 lakh shares.

The current paid up equity of the company is Rs 8.75 crore, comprising 87.5 lakh shares of Rs 10 each, which would be enhanced to Rs 10 crore after the IPO. At present, Mr Patel and his two brothers Darshan and Devendra and their family members hold the entire equity of the company.

The company is expecting a net profit of around Rs 32 crore (Rs 320 million) this year, on a turnover of around Rs 275 crore (Rs 27.5 billion). “Considering a conservative PE of 20 and an EPS of 36.5, the price at which the shares would be issued in the market is expected to be over Rs 700 a share,” Vinod Sharma, head of research, Anagram Securities said. The current book value of the share is Rs 95.

Mr Patel said he would not be able to comment on the price band as yet. He said that it would be a book-building issue.

Like many successful Gujarat-based firms, Paras had thwarted moves by foreign players to pick up stake in the company. Girish Patel said he would not offer equity to a foreign company yet, though he is negotiating with a UK-based private equity player to offer a stake in the Ahmedabad-based Sterling Hospitals, which the brothers jointly promote.

In 2005, Paras had notched up sales of around Rs 250 crore (Rs 2.5 billion), with an exports turnover of Rs 30 crore (Rs 300 million). There would be an increased focus on exports henceforth, and a special emphasis on India’s youth market.

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