Celestial Labs is entering the capital market on 18th June 07 with a public issue of 50 lakh equity shares of Rs.10 each at a premium of Rs.50 per share (total issue price Rs.60 per share) for Rs.30 crores.
The company offers ERP solutions, data warehousing, business intelligence solutions and bio-services like clinical data management, gene sequence analysis, molecular modeling, design and development of Drug molecules. Its clientele is mainly the health sector wherein its customer list pans those from govt. institutions, pharma and bio-tech companies to hospitals and medical centres in India and abroad.
The company is now enhancing its existing infrastructure for Bio-informatics and Drug Molecule Development and related services, setting up infrastructure for manufacturing Enzymes, setting up marketing and liaison office in US and total outlay is estimated at Rs.40.60 crores. The means of financing is interesting with Rs.2 crore coming from PNB, Rs4.90 crore as term loan from Technology Development Board, and Rs.75 lakh as term loan from Dept. of Science of Technology, both Central government Institutions. The projects would go on stream between March 08 to August 08.
The financial performance of the company is also on an upward move. For FY 07, total income was placed at Rs.14.13 crores with PBT of Rs.5.20 crores and PAT of Rs.5.14 crores, resulting in an EPS of Rs.8.30 on equity of Rs.6.19 crores. The tax shelter to the company has accrued due to section 1O A (Software Technology Park benefits) and sector 35(2AB) available to undertakings engaged in In-house R&D and eligible for weighted deduction of 125%. The book value per share on 31-03-07 was Rs.33.63 with net worth of Rs.20.83 crores. Now this is not too bad!
The company has requisite approvals of US and Indian authorities, which would enable the company to expand. However, there are concerns about the Enzyme project, costing Rs.14.67 crores, as some of the companies have failed on similar projects in the past.
Promoters present stake is 64%, which would fall to 35% post issue. In recent times, this issue holds the distinction of having one of the lowest promoters stake. However, if company is able to scale up its operations, the investment could be rewarding.
On historic earning, share is issued at a PE multiple of close to 7. Post expansion share would look attractive. So this investment is only for those who have a long term perspective in mind.