Medico Remedies Ltd

Started in 1994, Medico Remedies Limited is a WHO-GMP & ISO-9001:2008 certified company engaged in manufacturing and selling of pharmaceutical formulation products in India. The company offers formulation pharmacy products including anti-infective, beta lactum, cephalosporin, antimalarial, antiretroviral, and anti-ulcer drugs, as well as antacids; vitamins, haematinics and other supplements and nonsteroidal anti-inflammatory drugs, antihistaminics, anti-diabetics, cardio vascular drugs, diuretics, anti-epileptics, combination drug kits, syrups and creams and gels. They serves wholesalers or traders of formulation products. The company also exports its products to Uganda, Myanmar, Vietnam, Cambodia, Dominican Republic, Sri Lanka, Philippines, Turkmenistan, Ghana, Mauritius, Madagascar, Congo, Iraq, Honduras, Cuba, Jamaica, Hong Kong, Nigeria, Senegal, Panama, Mozambique etc. On financial performance front, MRL has reported total revenues/net profits of Rs. 33.80 cr. / Rs. 0.43 cr. (FY13), Rs. 44.98 cr. / Rs. 0.63 cr. (FY14), Rs. 51.11 cr. / Rs. 0.79 cr. (FY15), Rs. 66.93 cr. / Rs. 1.13 cr. (FY16) and Rs. 57.78 cr. / Rs. 1.63 cr. (FY17). For H1 of the current fiscal ended on 31.09.17 it has posted net profit of Rs. 0.40 crore on total revenues of Rs. 29.76 cr. Company has shown consistent growth in top line and bottom line except It has suffered a setback for FY17 in top line. The company has reported an average EPS of Rs. 4.17 and an average RoNW of 8.49% for last three fiscals on the basis of equity capital of Rs. 3.2 crore. Issue is priced at a P/BV of 1.95 on the basis of its NAV as on 31.03.17 and at a P/BV of 1.61 on the basis of its post issue NAV. If we annualise latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 52 and as per FY17 earnings P/E is 25.48. According to offer documents, other listed players are trading in range of 13 - 31 P/E as per FY17 earnings. Issue appears aggressively priced as per latest earnings. On merchant banker's front, this is the 19th mandate from its stable and out of last ten listings 3 opened below issue price, 3 opened at par, 3 opened at a premium ranging from 0.5% - 2% premium and 1 at 20% premium to offer price on the day of listing. As per financials, Company has shown consistent growth in top line and bottom line except It has suffered a setback for FY17 in top line, RoNW is 8.49% for last three fiscals and issue is aggressively priced as per latest earnings. So we give NEUTRAL rating to this SME IPO.

• 1 Mr Haresh Mehta
• 2 Mr Harshit Mehta
• 3 Ms Rita Mehta