Monday, August 8, 2011

Brooks Labs IPO

Brooks Laboratories, a pharmaceutical company has come out with an IPO of Rs 63 crore. The company is a pharmaceutical contract research and manufacturing (CMO) services company. It has a wide range of products catering to the critical care segment in parental sections like Beta Lactam, Cephalosporin & general dry powder injectables, Ampoules and liquid vials, dry syrups and tablets etc. Its product portfolio comprises of 28 injectables, 19 tablets and 2 dry syrups which are marketed domestically.

Brooks Labs IPO shall open on 16th August and shall close on 18th August, 2011. The company has fixed the price band at Rs 90-100 a share.

Brooks Labs plans to utilize the proceeds of the issue to set up a new manufacturing unit at JB SEZ Pvt Ltd, Panoli, Gujarat for manufacturing various pharmaceuticals formulations to the tune of Rs 51.8 crore. It also needs Rs 5 crore for long-term working capital.

In the year ended March 2011, Brooks reported a 17% growth in revenues to Rs 53.20 crore over the previous year. The net profit for the same period went up 32.6% to Rs 6.9 crore and secured loans declined 26.5% in FY11 to Rs 8.7 crore.

D & A Financial Services Pvt Ltd is the book running lead manager to the issue. Link Intime India Pvt Ltd is the registrar.

Recommendation:
ICRA has rated Grade 2 to the IPO indicating below average fundamentals and CRISIL has assigned Grade 3 to the IPO indicating average fundamentals. We would not recommend this IPO to investors at this time especially with so much volatility in stock markets. Please let us know your recommedation for this IPO as well by leaving a comment on this post!

Subscription:
Brooks Laboratories IPO has got subscribed 1.6 times.

At the close of the IPO,
QII segment got subscribed by 0 times
NII segment got subscribed by 2.82 times
Retail segment got subscribed by 3.36 times

Allotment:
Click here to check Brooks Labs IPO Allotment Status!

Listing:
The company has fixed the issue price at Rs 100 and the IPO got listed on 5th September. The share opened at Rs 110 and rallied 31% in early trade to a high of Rs 131.10 but crashed drastically in later part of the day. The stock touched an intra-day low of Rs 57.75, before closing down 40% at Rs 60.20 on BSE.