SPA Securities has come out with a report on Anu's Laboratories' IPO. It has recommended a neutral rating on the issue.

The issue has opened for subscription today with its initial public offering (IPO) of 38,20,000 equity shares of face value Rs 10 each. The issue will close on May 15, 2008. The price band has been fixed at Rs 200 to Rs 210 per equity share.

SPA's report on Anu's Laboratories' IPO:

Anu's Laboratories (ALL) is an ISO 9001:2000 certified incorporated in 1996, engaged in manufacturing of Bulk Active Pharma Ingredients (API), Intermediates for drugs molecules and fine chemicals. It has the manufacturing facilities for key intermediaries 2,4-Dichloro-5-Fluoro Actophenone (DCFA), Chlorohexanone and Methyl-4 a, a Di-Methyl Acetate. Company exports to Israel, Italy, Japan, France, USA and Singapore, currently this contributes only 20% of the revenues. Company has in-house R&D team having capability to handle complex molecular synthesis and operations. It has presence in custom synthesis and contract research, having state-of-the-art R&D facilities, located at Balanagar, Hyderabad. This facility supports the process of product development, contract research and customised synthesis programmes of the company. The in-house R&D facilities of the company are recognized by Government of India, Department of Scientific & Industrial Research (DSIR). With continuous focus on research & development, the company‟s in-house R&D team has been able to develop process for some of APIs / intermediates viz. Deltiazem, Pentoxyfiline, Ciprofloxicin, Fexofinadine, Iopamidol and Naproxen.

Valuation:

Based on annualized 9m FY08 earnings Rs.14.49 the issue is offered at 13.80x and 14.49x its upper band and lower band respectively. We like the product mix and the niche segment which company caters to with significant market share. However, the issue is valued in line with its listed peers and hence it does not leave any room for upside. Hence we recommend a “Neutral” rating to the issue.
 
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