Zenith Drugs shares list at 39% premium

Shares of Zenith Drugs Ltd made a strong debut on the SME platform of the National Stock Exchange of India (NSE), Emerge, on Tuesday, February 27, listing at more than 39% premium over its initial public offering (IPO) price. However, the stock could not hold the gains and was soon locked in a 5% lower circuit at ₹104.5 levels.

The ₹40.68-crore Zenith Drugs IPO had opened for subscription between 19 February and 22 February (both days included).

The price band of the issue was fixed at ₹75-79 apiece. The lot size was 1,600 shares. This aggregated to a minimum application amount of ₹1.26 lakh for retail investors.

Tuesday’s listing meant that retail investors who were successfully allotted Zenith Drugs shares were sitting on a profit of at least ₹49,600 as soon as the stock opened for trading. The stock also gained further to hit a high of ₹114.5 apiece.

The pharma company had received strong response in terms of subscription from both retail and non-retail investors. The Zenith Drugs IPO was oversubscribed by around 179 times after the final day of bidding on February 22.

While the retail quota saw an oversubscription of around 139 times, the portion reserved for qualified institutional buyers (QIBs) was oversubscribed by 106.72 times.

The non-institutional investors’ (NII) category was the most subscribed, with bids received being 368 times higher than the shares on offer.

According to Zenith Drugs Ltd, the proceeds from the IPO would be primarily used for the purchase of machinery and setting up of a new plant along with upgradation of existing manufacturing block. Funds would also be used for working capital requirements and general corporate purposes.

Zenith Drugs Ltd is engaged in the manufacturing and marketing of medicines in various formulations such as ORS powder, liquid oral, ointments, creams, gels and liquid externals, capsules, tablets. The Indore-based company was incorporated in 2000.

Zenith Drugs manufactures more than 250 molecules and 780 dosage forms in its manufacturing facility in Indore which is designed as per latest WHO-GMP norms. It has a diverse product range of more than 600 FDA-approved drugs.

It also exports products to countries in Central America, the Pacific region, Southeast Asia, the Caribbean, and Africa.

In FY2022-23 the company’s revenue grew nearly 25% to ₹115.7 crore compared to ₹92.67 crore in the previous financial year. The company’s net profit increased 64.5% to ₹5.15 crore in FY23 as against ₹3.13 crore in FY22.

The company’s revenue during the six-month period ended September 2023 stood at ₹69.48 crore with a net profit of ₹5.39 crore in the current financial year.