in management (nimesulide) apart from intermediate products. It supplies products to domestic pharma companies, including Indoco Remedies, Nicholas Piramal, Bayer Pharmaceuticals, Unicure and Cipla. Mangalam has manufacturing facilities at Vapi in Gujarat and Sangamer in Maharashtra. The company plans to raise Rs 14.3 crore through the issue to expand its existing capacities, finance working capital and repay debt, totalling Rs 1.18 crore. The capacity to manufacture anti-malarial bulk drugs is proposed to be increased to 1560 mtpa (from 600 mtpa currently) while that to manufacture aluminium choloride is to be hiked to 6,000 mtpa (from 3350 mtpa currently). Now, anti-malarials is the largest contributor to sales, accounting for 58 per cent of the turnover. Since the demand for bulk drugs is growing fast, the expansion should help the company catapult its growth. Mangalam is yet to gain a significant presence in the international markets despite the huge outsourcing opportunity for bulk drug/API (active pharmaceutical ingradients) producers. Currently, around 10 per cent of its revenues comes from exports. The company is planning to focus on international sales since anti-malarials enjoy a large market in Africa, Pakistan, Bandladesh and other tropical countries. It expects exports to add up to about a quarter of sales in a couple of years.
For FY03-04, Mangalam clocked sales of Rs 80 crore and an EBITDA (earnings before interest, tax, depreciation and amortisation) of Rs 5.41 crore. Net profit stood at Rs 1.91 crore. For the first nine months of FY05, it posted sales of Rs 68.62 crore, an EBITDA of Rs 4.87 crore and a net profit of Rs 2.60 crore. The annualised earning per share (based on pre-issue equity) for the period is Rs 5.20. Based on the issue price of Rs 22, the stock is available at a price-earnings ratio of 4x. Comparable firms like Aarti Drugs and JB Chemicals are trading at 10x trailing earnings. The issue looks worth a shot. Mangalam Bhavatu! Issue opens: April 19, 2005 Issue closes: April 26, 2005
| Financials | ||
| (Rs crore) | Mar 04 | Dec 04 |
| 12 months | 9 months | |
| Sales | 80.36 | 68.62 |
| Other income | 0.39 | 0.23 |
| Total expenditure | 74.24 | 67.97 |
| EBITDA | 5.41 | 4.87 |
| Net profit | 1.91 | 2.6* |
| EPS (Rs) | 2.86 | 5.19 |
| P/E (X) | 7.69 | 4.23 |
| * Annualised | ||