CHANDRA BHAGAT PHARMA LIMITED

Started in 2003, Chandra Bhagat Pharma Limited is engaged in the marketing of lifesaving medicines in India such as Cardiovascular, Antineoplastic, Antibiotics and Hormones medicines. They provide pharmaceuticals and special chemical products in the Indian and international market. The company has own sales force and distribution network to work under the brand name and supply products to the Health care center and Hospital. Chandra Bhagat Pharma also deals in import, supply and indenting in Active Pharmaceuticals Ingredients (API) and the intermediate. The company has FDA approval to get formulations manufactured from a contract manufacturer. It has a presence for formulations in some therapeutic categories such as Anesthesia, Cardiovascular, Anti-cancer (Oncology), Pediatrics, Nephrology, Antiviral, Anti-fungal, and Neurology. The warehouses/ storage houses of the company are on lease agreements at Bhiwandi- Thane, Maharashtra. Chandra Bhagat Pharma also exports Pharmaceutical Formulations to other countries like DR Congo, Bolivia and Philippines. On the financial performance front, for the last three fiscals, CB Pharma has posted turnover/ net profits of Rs. 90.28 cr. / Rs. 0.66 cr. (FY17), Rs. 97.73 cr. / Rs. 1.03 cr. (FY18) and Rs. 106.72 cr. / Rs. 0.63 cr. (FY19). For upto 31.07.19 FY20, company had posted net profit of Rs 0.25 cr. on a turnover of Rs. 33.45 cr. For the last three fiscals, company has posted an average EPS of Rs. 1.94 and an average RoNW of 8.14%. The issue is priced at a P/BV of 1.57 based on its NAV of Rs. 32.41 post issue.  If we annualise latest earnings of FY20 and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 51 and if we consider FY19 earnings, than its priced at P/E of 61. So issue looks aggressively priced. The comparison between peers is shown in above table. On BRLM's front, for Beeline Broking Limited this is the 4th IPO and from last 3 IPOs, all opened around or above issue price with 1% to 10% premium on the day of listing. As of now, from last 3 IPOs, 1 are trading below issue price and remaining above or at par issue price. ( As on 31.01.20 ) Company has shown average results and issue is priced at P/E of around 61 as per FY19 earnings, which looks aggressively priced. Also the company is working in very competitive business segments. The performance of BRLM is average, So we give AVOID rating to this SME IPO.

• 1 Mr. Hemant Chandravadan Bhagat
• 2 Mr. Pranav Hemant Bhagat