Medicamen Organics Limited is engaged in developing, manufacturing and distribution of broad range of pharmaceutical dosage including generic dosage in form of Tablets, Capsules, Oral Liquids, Ointments, Gel, Syrups, Suspension and Dry powders for government (including both state and central governments) and private institutions as contract manufacturer / third party manufacturer. They market the product to private pharma companies in domestic as well as international markets through third party distributors or on loan license basis. They have directly exported the product in Burundi. They have a track record of operating B2B model which covers contract manufacturing model. The products are marketed across India as well as African, CIS and south East Asian Countries like Congo, Benin, Cameg, Togo, Senegal, Burkina Faso, Philippines, Myanmar, Mozambique, Togo, Burundi, Kyrgyzstan and Kenya by the third-party distributor. Company has 2 WHO GMP approved manufacturing facilities located at Ranipur, Haridwar, Uttarakhand spread across 21,536 Sq. Ft. The manufacturing facilities are capable of producing pharmaceutical formulations and products and has fully equipped quality control department with experienced and qualified staff to facilitate smooth manufacturing process. They have in-house testing laboratory and necessary infrastructure to test the raw materials and finished products to match the quality standards. The core strength lies in product development and documentation, they are regularly engaged in research and development and launching new products. This gives them an exhaustive product list as well as fair pricing in the market. The product portfolio consists of 84 products and comprises of wide range of drugs like, Anti-Bacterial, Anti Diarrheal, Anti-Fungal, Anti-Malarial, Anti Diabetic, Proton Pump Inhibitor, Anti Histamine, Anti-Hypertensive drugs, Anti Lipidemic Drug, Anti Parasitic, Multivitamin, Multimineral and Nonsteroidal anti-inflammatory drug (NSAIDS). As on March 31, 2024 they have entered into contract manufacturing with 44 domestic partners and 12 merchant exporters. As per financial performance, Medicamen Organics Limited has posted total income / net profits of Rs 25.05 Cr / Rs 0.29 Cr (FY21), Rs 21.18 Cr / Rs 0.10 Cr (FY22), Rs 22.96 Cr / Rs 0.97 Cr (FY23) and Rs 25.28 Cr / Rs 2.40 Cr (FY24). So as per previous financials data, company has shown average results. But, sudden rise in net-profit is very surprising and trade receivables are nearly 66% of FY24 total sales. Company has posted an average EPS of Rs 2.15 and average RoNW of 11.72% for last three fiscals. Issue is priced at a P/BV of 1.93 as per NAV of 17.66 as on 31.03.24. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 392.31, 41.04 and 16.55 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, GYR Capital Advisors Private Limited is associated with this SME IPO and handled 25 SME IPOs and in last 3 year. From last 10 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 SME IPOs, one trading below issue price and remaining are trading above issue price. ( As on 17.06.24 ) As per financials, Medicamen Organics Limited has shown average results, RoNW is 15.83% and P/E is respectively 392.31, 41.04 and 16.55 as per FY22, FY23 and FY24 earnings. So, issue looks fully priced, but sudden rise in net-profit is very surprising and higher value of trade receivables generates doubts. Company is engaged in developing, manufacturing and distribution of broad range of pharmaceutical dosage, which is highly competitive and fragmented business segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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