Price Band and Dates of Astec IPO
The IPO is priced between Rs. 77 to Rs. 82. It opened on October 29th 2009, and will close on November 4th 2009.
IPO Grading
ASTEC Lifesciences has been graded 2 out 5 by CARE, which denotes below average fundamentals.
Business of ASTEC
Astec is engaged in the following two segments:
- Agrochemicals
- Pharmaceuticals
The agrochemicals segment involves manufacture of active ingredients, intermediates and formulations. The company is involved in manufacturing products that are used in crop protection and anti fungal agents.
The Triazole fungicide — its main product — is used in the agrochemical segment, and contributed 65.81% to sales. Dicap, its key product in the pharmaceutical segment contributed 14.14% of sales during FY 2008 – 09. So, you can see that the major chunk of revenue come from the agrochemical sector.
It has two plants – one in Mahad, Maharastra and the other in Dombivili, Maharashtra. The company is coming out with the IPO primarily to raise funds for expansion of the manufacturing facility of the Mahad plant and expanding the R&D facility of the Dombivili plant.
Financials of Astec
The company had net sales of Rs. 8,441.46 lakhs in 2008 – 09, up from 6,120.78 lakhs in 2007 – 08. The corresponding net profit for the two years was Rs. 1072.98 lakhs and Rs. 793.64 lakhs.
The company had an EPS of Rs.11.37 for the last year, and the P/E ratio comes out between 6.77 and 7.21 on the higher and lower band based on the earnings. BL states that much larger companies such as Hikal, Meghmani Organics and Sabero Organics command multiples of just 5 – 6 times.
Risk Factors
There are several criminal and civil legal proceedings against the company, its directors and promoters. Any decision against them will impact the future of the business.
Astec operates in the agrochemical industry and is vulnerable to seasonal and weather fluctuations.
The company is subject to product liability claims in relation to the quality of and use of its products. This means that if someone is harmed by the use of its products, the company can be liable to pay claims. This exposes it to potential legal costs.
Conclusion
These were some key factors that you should keep in mind while thinking of investing in the Astec IPO. The grading, earning comparison, and industry that the company is in are all important factors to keep in mind while deciding whether you should invest in the company or not.
