Inventia Healthcare IPO Review

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Inventia Healthcare IPO

7.3

Company Background

7.5/10

Price Band

7.0/10

Financial Health

8.0/10

Industry Situation

7.5/10

IPO Proceeds Usage

6.5/10

Pros

  • High R&D Focus
  • Manufactures OSDF products
  • Positive Financials

Cons

  • Single Manufacturing Unit
  • Regulatory Approvals & Audits Needed

Inventia Healthcare Limited Basic Details

Here is a quick summary of some of the important data points around Inventia Healthcare IPO for your reference:

 

Inventia Healthcare Limited Background

Inventia Healthcare Limited, which has been operating for more than 30 years is a pharmaceutical development and manufacturing company. Its headquarters are in Mumbai.

The company is focussed on developing value-added oral solid dosage formulations. They are engaged in providing end-to-end solutions starting from research and development to final manufacturing and packaging of products.

After the development of a product, they form partnerships with mid-sized and large pharmaceutical companies and distributors having a local or multinational presence in order to sell their products.

For most of the products, the proprietary technology and manufacturing rights belong to Inventia Healthcare and are sold on a non-exclusive basis under the partner’s brand name. The company not only caters to the domestic market but also exports to many countries in Latin America, South East Asia, SAARC, North America, Middle East and Africa etc.

The business is coming up with an IPO in the next few days for specific reasons. In this detailed review, we will talk about various facets related to this IPO so that you can take a call on whether to go ahead with your investment or not.

Inventia Healthcare Limited Management Information

Currently, there are 10 Directors on the Board of Inventia Healthcare Limited.

Janak Shah is the Chairman and Managing Director of the company. He possesses a bachelor’s degree in pharmacy from the Gujarat University and has been in the pharmaceutical industry for over 25 years.

He is responsible for taking care of the strategic growth initiatives of the company including diversification of existing business and exploring new technologies that could be used in the manufacturing process of finished products.

Inventia Healthcare IPO Data Points

Inventia Healthcare IPO will open on (undisclosed) and close for subscription on (undisclosed).

The IPO size will be of (undisclosed) lakh Equity shares and the face value of share will be ₹(undisclosed) each share.

The offer consists of a fresh issue of up to (undisclosed) lakh equity shares aggregating up to ₹125 crores and an offer for sale of up to 31.64 lakh equity shares by selling shareholders.

  • Up to 3.6 lakh equity shares, aggregating up to ₹(undisclosed) lakhs are being offered by Janak Shah,  
  • Up to 3.6 lakh equity shares, aggregating up to ₹(undisclosed) lakhs are being offered by Maya Shah and the rest
  • 24.44 lakh shares, aggregating up to ₹(undisclosed) lakhs are being offered by NYLIM Jacob Ballas India Fund III, LLC.

The price band has been set at ₹(undisclosed) per share.

The offer price includes a premium of ₹(undisclosed) and is (undisclosed) times the face value of the equity shares. The IPO size is expected to be up to ₹450 crores. The market lot size is of (undisclosed) equity shares and the shares will be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Pursuant to a resolution passed on July 24, the offer has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders at the Extraordinary General Meeting held on July 24, 2018, the offer has been approved by them.

Inventia Healthcare Limited Financial Performance

The financial health of the company is quite good.

Here are the details:

 

It has been showing a gradual and consistent increase in total income, profits after taxes and total assets. Revenues from operations increased by 11.49% from ₹277.37 crores in fiscal 2017 to ₹309.24 crores in fiscal 2018 whereas profits for the company increased by 10.74% from ₹14.18 crores in fiscal 2017 to ₹15.71 crores in fiscal 2018.

The return on net worth of the company for the years ended March 31, 2018, March 31, 2017, and March 31, 2016, is 9.01%, 8.64% and 8.61% respectively. As of March 31, 2018, the Restated Net Asset Value per Equity Share as per the Restated Financial Statements is ₹166.94

Inventia Healthcare IPO Objectives

The Inventia Healthcare IPO consists of two parts:

The proceeds from the offer for sale of equity shares will be given to the selling shareholders. Any proceeds from the offer for sale will not be received by the company for its operations.

The main objectives of the Inventia Healthcare IPO are as follows:

  • For repayment or prepayment of all or some of the loans taken by the company from banks and financial institutions
  • For meeting expenses related to the general corporate operations.

Other than the above-mentioned objectives, the company will also benefit in terms of enhanced corporate image, brand name and increased visibility through Inventia Healthcare IPO.

Looking at the reasons for the IPO mentioned above, it does not really give out a positive sign since the company is raising this public funding primarily to get rid of their existing debts and loans. No part of the money raised is going to be used for business expansion and growth.

Inventia Healthcare IPO Events

Dates are very crucial to remember when it comes to Initial Public Offerings. This is because there are multiple events related to IPO launch and interested investors need to know what happens when during the IPO process.

For Investia Healthcare IPO, here are the details:

Filing of Draft Red Herring Prospectus (DRHP)September 20, 2018
Anchor ListTBA
IPO Open Date TBA
IPO Close DateTBA
Finalization of Basis of AllotmentTBA
Credit to Demat AccountsTBA
Listing at BSE and NSETBA

 

Inventia Healthcare IPO Recommendation

Before deciding whether to invest in the IPO or not, let us discuss some of the major strengths and risks related to the business of Inventia Healthcare.

The company invests a lot of money into its Research and Development (R&D) Department. The investment in research and development in fiscal 2018 amounted to ₹34.88 crores. It has 12 patents for formulations in India, 4 patents in the United States, 3 in Europe and one patent in South Korea.

Another major strength of the company is that it is engaged in manufacturing OSDF products, which are very difficult to formulate and may face legal and regulatory challenges.

The company shares good and long-standing relationships with its partners. The strategies of the company for further growth and expansion seem quite promising.

One of the biggest strength is its experience and good financial record over the last few years. The revenues and profit after taxes have been increasing continuously for the last 5 years.

Now let us discuss some of the risks related to the business of the company.

All the products of the company are manufactured at the Ambernath facility in Maharashtra which exposes the company to operating risks like the breakdown of equipment or industrial accidents, etc.

The nature of the business of the company is such that there is a long gap between the development and commercialization of products. A delay or failure in achieving commercialization may have a negative impact on the operations and financial health of the company.

Inadequate supply of raw materials or an increase in their costs may have adverse effects on the business and operations of the company.

The products and manufacturing facilities are subject to regulatory approvals and audits that need to be conducted by different regulatory authorities. Any inability to maintain or obtain such approvals may have significant effects on the operations of the company.

The company is exposed to foreign exchange fluctuations because of the export of its products to different countries. Also, various duties may also be imposed on the export of products which may affect the profitability of the company.

Majority of the revenues of the company are derived from some key products. Any decline in their demand could affect the profitability of the company.

It is also exposed to the risk of uncertainties associated with the pricing and demand for their products. The company, its promoters, Directors, etc. are involved in certain legal proceedings and any adverse ruling in them may pose a risk to the overall profitability of the company.

If the company is not able to forecast the demand for their products accurately, it may significantly affect the cash flows and financial health of the business.


After studying various aspects of the company, it can be said that the business of the company looks promising and investors may choose to subscribe to the Inventia Healthcare IPO, however, primarily for a long-term investment. There might not be many short-term quick returns from this IPO.


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Inventia Healthcare IPO Advisors Information

ICICI Securities Limited and Centrum Capital Limited are acting as Book Running Lead Manager to the issue. Khaitan & Co is acting as legal advisor to Inventia Healthcare Limited as to Indian Law. Link Intime India Private Limited is acting as the Registrar for the Inventia Healthcare IPO.

Khaitan & Co is acting as legal advisor to investor selling shareholder. Cyril Amarchand Mangaldas is acting as legal advisor and Squire Patton Boggs Singapore LLP is acting as special purpose international legal counsel for book running lead managers.

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