Quest Laboratories IPO Review - Issue Date, Price, GMP, Allotment, Lot Size, and Details

The Quest Laboratories IPO is a book-built issue worth Rs 43.16 crores, comprising entirely of fresh shares totaling 44.5 lakh. Subscription opens on May 15, 2024, and closes on May 17, 2024, with the allotment expected to be finalized by May 21, 2024. It is slated to list on NSE SME on May 23, 2024.

The price band is set between ₹93 to ₹97 per share, with a minimum lot size of 1200 shares requiring a retail investor to invest at least ₹116,400. For HNIs, the minimum investment is 2 lots, totaling 2400 shares, requiring ₹232,800.

Shreni Shares Limited acts as the book running lead manager, while Bigshare Services Pvt Ltd serves as the registrar. Rikhav Securities is the market maker for the IPO.

The Issue comprises of fresh issue of up to 44,49,600 Equity Shares. Company proposes to utilize the Net Proceeds towards:

  1. Funding of capital expenditure towards purchase of plant and machineries for expansion at the existing manufacturing facility.
  2. Funding working capital requirements of the company.
  3. General corporate purposes.

The company intends to expand and upgrade manufacturing capacities for existing formulations and new formulations currently in the development and commercialization stages. As the company plans to enter the injectable section, particularly in the oncology field, they require new plants and machinery for manufacturing injectable sections comprising liquid vials and ampoules, as well as dry injections, particularly in the field of oncology.

Quest Laboratories IPO Details

IPO Date May 15, 2024 to May 17, 2024
Listing Date May 23, 2024
Face Value ₹10 per share
Price ₹93 to ₹97 per share
Lot Size 1200 Shares
Total Issue Size ₹43.16 Cr
Fresh Issue 4,449,600 shares (aggregating up to ₹43.16 Cr)
Offer for Sale Nil
Issue Type Book Built Issue IPO
Listing At NSE SME
Share holding pre issue 11,937,600
Share holding post issue 16,387,200

Quest Laboratories IPO Lot Size

Application Lots Shares Amount
Retail (Min) 1 1200 ₹116,400
Retail (Max) 1 1200 ₹116,400
HNI (Min) 2 2,400 ₹232,800

Quest Laboratories IPO Timeline (Tentative Schedule)

IPO Open Date Wednesday, May 15, 2024
IPO Close Date Friday, May 17, 2024
Basis of Allotment Tuesday, May 21, 2024
Initiation of Refunds Wednesday, May 22, 2024
Credit of Shares to Demat Wednesday, May 22, 2024
Listing Date Thursday, May 23, 2024
Cut-off time for UPI mandate confirmation 5 PM on May 17, 2024

Quest Laboratories IPO Reservation

Investor Category Shares Offered Reservation %
Anchor Investor Shares Offered 1,236,000 (27.78%) N/A
Market Maker Shares Offered 228,000 (5.12%) N/A
QIB Shares Offered 831,600 (18.69%) N/A
NII (HNI) Shares Offered 655,200 (14.72%) N/A
Retail Shares Offered 1,498,800 (33.68%) N/A
Total Shares Offered 4,449,600 (100%)

Quest Laboratories IPO Promoter Holding

Share Holding Pre Issue 90.36%
Share Holding Post Issue 65.82%

About Quest Laboratories Limited

Quest Laboratories Limited is engaged in the business of manufacturing of pharmaceutical formulations across a broad spectrum, including antibiotics, antimalarials, antispasmodics, anti-inflammatories, antiemetics, respiratory medications, diabetes treatments, antidepressants, and more. These formulations fall under the trademark “Quest Laboratories Limited”. The company produces a variety of products, comprising ethical drugs, generic drugs, and over[1]the-counter drugs (OTC). These products are available in various forms such as tablets, liquid orals, oral dry powders, oral powders (ORS), ointments, and external liquids. This comprehensive approach allows company to address a wide range of medical needs and preferences among patients.

Company holds WHO Schedule M GMP, and GLP certifications, adhering to the stringent guidelines set by the World Health Organization. Company also possesses Good Laboratory Practice (GLP) certificate issued by Food & Drug Administration, in-house laboratory is equipped with various equipment such as HPLC (High-Performance Liquid Chromatography), GC (Gas Chromatography), FTIR (Fourier Transform Infrared Spectroscopy), UV (Ultraviolet-Visible Spectroscopy), Dissolution apparatus, and other advanced instruments.

With manufacturing facility in Madhya Pradesh, company have been receiving sales orders from the private sector & government institutions on regular basis. This collaborative approach offers benefits to the purchasers, including cost efficiency through bulk production, capacity scaling, regulatory compliance, reduced lead times, risk mitigation, access to specialized technologies, geographical expansion, cost effective compliance, and resource optimization.

Company operates in the domestic market across twelve (12) states and two (2) union territories namely Uttar Pradesh, Madhya Pradesh, Maharashtra, Delhi, Jharkhand, Assam, Karnataka, Jammu & Kashmir, Rajasthan, West Bengal Gujarat, Telangana, Haryana and Bihar.

Market size of India pharmaceuticals industry is expected to reach US$ 65 billion by 2024, and ~US$ 130 billion by 2030. According to the government data, the Indian pharmaceutical industry is worth approximately US$ 50 billion with over US$ 25 billion of the value coming from exports. About 20% of the global exports in generic drugs are met by India.

India is among the top 12 destinations for biotechnology worldwide and 3rd largest destination for biotechnology in Asia Pacific. In 2022, India’s Biotechnology industry crossed US$ 80.12 billion, growing 14% from the previous year. During FY18 to FY23, the Indian pharmaceutical industry logged a compound annual growth rate (CAGR) of 6-8%, primarily driven by an 8% increase in exports and a 6% rise in the domestic market.

Risk associated to the issue:

  • Any manufacturing or quality control problems may disrupt business operations, damage reputation for high quality production and exposes the company to potential litigation or other liabilities, which would negatively impact.
  • Company is reliant on the demand from the pharmaceutical industry for a significant portion of its revenue. Any downturn in the pharmaceutical industry or an inability to increase or effectively manage their sales could have an adverse impact on Company’s business and results of operations.
  • The availability of counterfeit drugs, such as drugs passed off by others as company’s products, could adversely affect their goodwill and results of operations.
  • Approximately 70% of the business is from sale to government. Top 10 customers hold approximately 97% of sales.
  • Company requires significant amounts of working capital for a continued growth. Inability to meet working capital requirements may have an adverse effect on results.

Quest Laboratories Limited Financial Information (Restated Consolidated)

Amount in (Rs. Crore)

Period Ended 31st Dec 23 31st Mar 23 31st Mar 22 31st Mar 21
Reserve of Surplus 11.98 13.94 8.92 4.81
Total Assets 58.69 46.65 34.80 18.40
Total Borrowings 4.61 4.10 3.13 3.04
Fixed Assets 9.97 9.93 7.46 6.02
Cash 0.05 2.50 1.57 0.42
Net Borrowing 4.56 1.60 1.56 2.62
Revenue 62.08 61.64 59.48 30.36
EBITDA 12.09 7.82 6.47 1.42
PAT 7.75 5.03 4.11 0.66
EPS 7.18 4.66 3.81 0.61

Key Performance Indicator

KPI Values
EPS Pre IPO (Rs.) 4.21
EPS Post IPO (Rs.) 6.31
P/E Pre IPO 23.03
P/E Post IPO 15.38
ROE 40.20%
ROCE 38.30%
P/BV 5.09
Debt/Equity 0.20
RoNW 33.47%

Quest Laboratories Limited IPO Peer Comparison

Company Name EPS ROCE ROE P/E (x) P/Bv Debt/Equity RoNW (%)
Quest Laboratories Limited 4.21 38.30% 40.20% 6.31% 5.09 0.2 33.47%
Beta Drugs Ltd 37.9 36.00% 29.60% 31.9 7.40 0.07 36%
Alpa Laboratories Ltd 8.52 8.99% 7.26% 10.8 1.25 0.01 8.99%
Zenith Drugs Ltd - 26.6% 35.1% 21.2 - 1.28 26.6%
Quest Laboratories Limited Contact Details

QUEST LABORATORIES LIMITED

Plot No. 45, Sector III, Pithampur Industrial Area, Pithampur, Dhar - 454775, Madhya Pradesh, India.

E-mail: investors@questlabltd.com

Telephone: 07292292374

Webiste: www.questlabltd.com

Quest Laboratories IPO Registrar and Lead Manager(s)

BIGSHARE SERVICES PRIVATE LIMITED

Office No. S6-2, 6th Floor, Pinnacle Business Park, Next to Ahura Centre, Mahakali CavesRoad, Andheri East, Mumbai – 400 093, Maharashtra, India

Tel: 022 - 6263 8200

E-mail: ipo@bigshareonline.com

Website: www.bigshareonline.com

Quest Laboratories IPO Review

Quest Laboratories Ltd. manufactures a wide range of pharmaceutical products, catering to various medical needs. With trademarks like "Quest Laboratories Limited," they produce ethical, generic, and over-the-counter drugs in tablet, liquid, and ointment forms. The IPO's asking price, with an annualized FY24 earnings, reflects a P/E ratio of 15.37, while considering FY23 earnings, it stands at 31.60, indicating a fully priced issue. Over the last three years, it averaged an EPS of Rs. 3.70 and a RoNW of 32.28%. Notably, PAT margins have grown from 2% in FY21 to 12.5% in 9M-FY24, showing promising financial performance. Considering its recent profit surge from FY22, informed investors may cautiously consider moderate investment for the medium term, or can avoid the issue.

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