Valiant Laboratories IPO opens. Should you subscribe to the issue?

The initial public offer (IPO) of Valiant Laboratories, which opens for subscription on Wednesday, will run till October 3. Via the share sale, the company is aiming to raise Rs 152 crore.

Avinash Gorakshakar of Profitmart Securities advised investors to subscribe to the issue from a medium-to-long-term perspective.

"Given the market conditions, I don't think there will be any significant listing gains from this IPO. However, it is a good opportunity for investors if we look at a one to one-and-a-half year period in the chemicals space," Gorakshakar said.

Most brokerages and analysts are yet to offer their views on the IPO.

The offer, which is priced at Rs 133-140 apiece, is completely a fresh equity issue of 1.08 crore shares. Investors can bid for a minimum of 105 shares in one lot and in multiples thereof.

About 50% of the offer is set aside for qualified institutional buyers (QIBs), 15% is reserved for non-institutional investors (NIIs) and 35% for retail investors.

Net proceeds from the issue will be utilised towards part-financing its capex, funding working capital requirements and other general corporate purposes.

Valiant Labs is an active pharmaceutical ingredient (API/bulk drug manufacturing company, with a focus on producing Paracetamol. APIs serve as raw materials for manufacturing finished dosage forms or formulations.

The pharmaceutical API industry in India is ranked third-largest globally in terms of volume. It is expected to clock a CAGR of 5-7% between fiscal 2023 and fiscal 2027, largely driven by the demand from domestic formulation manufacturers as well as export markets.

Paracetamol is one of the most commonly taken analgesics worldwide and is recommended as the first-line therapy in pain conditions by the World Health Organization (WHO).

The company's revenues grew 16% to Rs 339 crore in the fiscal year 2023, while the net profit was marginally higher at Rs 28.9 crore, compared with Rs 27.4 crore a year ago.

Unistone Capital is the sole book-running lead manager to the issue and Link Intime India is the registrar.

Valiant Labs has set T+3 timeline for the listing of shares, which will be October 9. The finalisation of share allotment will likely be completed on October 5.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)