The chemistry of an IPO

Size:

25 lakh shares of Rs 70, aggregating Rs 17.50 crore

Opens:

9-Jul

Closes:

13-Jul

Lead manager:

UTI Securities

 Vivimed estimates the cost of expansion to be Rs 26.50 crore. It plans to partly fund this through an IPO. The issue, comprising 25 lakh equity shares of Rs 10 each at a premium of Rs 60 per share aggregating to Rs 17.5 crore, opened on Saturday (July 9) and will close on Wednesday (July 13).  The company has also tied up with State Bank of Hyderabad and Citibank for term loans of Rs 4.5 crore each.  At present, Triclosan contributes 54 per cent of the company's revenues. But the same is expected to come down as Vivimed ventures into other drugs.  The company currently commands a 12 per cent global market-share in Triclosan and has a non-infringing process patent, while Ciba is the competitor who has the patent for the product.  The company expects the Indian market for Triclosan to be on the growth path due to the increase in use of cosmetics.  Gross margins at present are 20 per cent. Moreover, it has developed two new molecules, NDGC and A123, which are expected to contribute to the bottomline, going forward. 

Financials
(In Rs Cr)	FY04	FY05	% change
Net sales	41.16	55.19	34.09
Net profit	4.00	4.84	21.00
NPM (%)	9.72	8.77	-95bps
EPS (Rs)	8.42	10.12	-
P/E	6.92

 Jabal Patel, an analyst with Sushil Finance Consultants, feels that Triclosan is finding new applications apart from the 2000 tonnes used globally in personal care segment and 1000 tonnes are used in other industrial segments.  Vivimed is slowly making inroads into the latter, too. Patel is also bullish about other products of the company like Avis.  Analysts feel that Vivimed is likely to gain market-share by eating into Ciba's pie. They are bullish about the potential for the company's business, which has scopes for an upside.