Tuesday, May 3, 2011

Aanjaneya Lifecare IPO - Analysis, Review, Recommendation

Aanjaneya Lifecare, a unit of Finaventure Capital, has come out with an IPO of 50 lakh shares and valued at around Rs 1.2 billion. The issue will constitute 39.76% of the fully diluted post issue paid-up capital of company.

Aanjaneya is a vertically integrated pharmaceutical company with manufacturing and marketing capabilities in APIs (Active Pharmaceutical Ingredients) with focus on anti-malarial, and Finished Dosage Forms (FDFs) catering to various therapeutic segments. Currently promoters Aasda Life Care Limited and Dr Kannan K Vishwanath hold 73.25% and 26.75% stake in the company, which will be reduced to 60.24% (in total) post issue.

The IPO shall open on May 9 and shall close on May 12, 2011. The company has fixed the price band at Rs 228-240 a share.

The company’s installed capacity for processing quinine, a pharmaceutical API for malaria derived from natural extracts, has grown from 2,00,000 kgs per annum in the year 2007 to 4,50,000 kgs per annum in the year 2010. It has already commenced production of third generation anti malarial APIs i.e. artemisinin and its derivatives.

The proceeds of the IPO are proposed to be utilized for setting up of Anti Cancer API Facility at Mahad, Maharashtra; setting up of cGMP block for APIs; setting up of intermediate API Block; expansion of existing research and development centre at Mahad and Pune, Maharashtra; setting up of a quality control and quality assurance block; setting up of product development laboratory; setting up of stores building; meeting the expenses for branding and registration of our products in the international markets.

For the year ended March 31, 2010, Aanjaneya has reported net profit of Rs 15.08 crore on total income of Rs 169.36 crore.

Anand Rathi Advisors Ltd and IDBI Capital Market Services Ltd are the book running lead managers to the issue.

Recommendation:
CRISIL has assigned Grade 1 to the IPO indicating poor fundamentals. We would not recommend this IPO to investors.