What you must know about Vilin Bio Med IPO

Vilin Bio Med Ltd, is an SME IPO on the NSE which is opening for subscription on 16th June 2023. The company, Vilin Bio Med Ltd, was incorporated in the year 2005, so it has a pedigree of nearly 2 decades. The company is engaged in the domestic pharma market as a key manufacturer of pharmaceutical products. It manufactures these products and then sells them in bulk to pharma manufacturers, marketers, and traders. They actually provide the channel for sales to customers.

It has a fairly wide product profile comprising of oral liquids like syrups and suspensions; dry powders as well as tablets and capsules. Both the dry powder and the capsules and tablets are manufactured in Beta and non-Beta Lactam formats. Apart from having its own manufacturing unit, Vilin Bio Med Ltd also has own R&D facility in Roorkee in the state of Uttarakhand. It is a small sized company with total revenues of just about Rs11.2 crore in the latest fiscal year ended March 2022.  

Key terms of the Vilin Bio Med SME IPO

Here are some of the highlights of the Vilin Bio Med IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 16th June 2023 and closes for subscription on 21st June 2023; both days inclusive.
   
• The company has a face value of ₹10 per share and the issue price for the fresh issue portion has a fixed price of ₹30 per share.
   
• The company will issue a total of 40 lakh shares at the price of ₹30 per share aggregating to a total fund raising of ₹12.00 crore.
   
• Since there is no offer for sale component in this issue, the fresh issue portion is also the total size of the issue of Vilin Bio Med Ltd.
   
• The company has allocated 50% of the issue size for the retail investor while the balance 50% is allocated to HNI / NII investors.
   
• The minimum lot size for the IPO investment will be 4,000 shares. Thus, retail investors can invest a minimum of ₹120,000 (4,000 x ₹30 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO.
   
• HNI / NII investors can invest a minimum of 2 lots comprising of 8,000 shares and having a minimum lot value of ₹240,000. There is no upper limit on what the HNI / NII investors can apply for. The break up is captured in the table below.

Like every SME IPO, this issue also has a marketing making portion with a market maker portion allocation of 208,000 shares. Rikhav Securities will act as the market maker to the issue providing two-way quotes to ensure liquidity on the counter.

The company has been promoted by Viswa Prasad Sadhanala, Sadhanala Venkata Rao, D. Srinivasa Reddy, and Ramesh Reddy Sama. The promoter stake in the company stands currently at 91.45%. Post the IPO, being a fresh issue of shares, the promoter stake will be get diluted to 64.52%.

While Inventure Merchant Banking Services Private Ltd will also be the lead manager to the issue, Bigshare Services Private Limited will be the registrar to the issue.

Key dates to be aware of in the Vilin Bio Med IPO (SME)

The SME IPO of Vilin Bio Med Ltd IPO opens on Friday, June 16th, 2023 and closes on Wednesday June 21st, 2023. The Vilin Bio Med Ltd IPO bid date is from June 16th, 2023 10.00 AM to June 21st, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is the June 21st, 2023 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account.

Financial highlights of Vilin Bio Med Ltd

The table below captures the key financials of Vilin Bio Med Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The company has had erratic performance on the top line and the bottom line. In fact, sales and profits have shrunk in the last 3 years. That is not a very positive signal for valuation. The profits continue to be very low and even if you consider the improved profits of the first nine months of FY23, the valuations may be hard to justify.

The company operates in the middle end of the pharmaceutical value chain where the margins are never too high. That will be an overhang on the company. Investors must look at this SME IPO with caution due to the trend of financials and the valuations demanded. It may be a very high risk call on the stock.