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Jun 20, 2007, 02.28 PM IST | Source: Moneycontrol.com

Subscribe to Celestial Labs IPO: Networth

Celestial Labs, a Hyderabad based company in the bio-informatics and bio-technology sector, is open for subscription with an initial public offer of 50-lakh equity shares of Rs 10 each. Neworth Stock Broking advised to subscribe the issue.

Celestial Labs, a Hyderabad based company in the bio-informatics and bio-technology sector, is open for subscription with an initial public offer, IPO of 50-lakh equity shares of Rs 10 each at a price of Rs 60 per share aggregating Rs 30 crore.

The issue will close on June 22, 2007. Of the total issue, 2-lakh shares have been reserved for employees and the net offer to the public constitutes 48-lakh shares. The issue comprises of 44.67% of the fully dilutes post-issue paid capital of the company.

Networth Stock Broking report on Celestial Labs IPO:

Company Profile

Celestial Labs, a Hyderabad based company established in 1997, works in the space of Bioinformatics, Biotechnology and Consultancy work and plans to expand into enzyme production and drug development. The company offers BIO INFORMATICS SERVICES to Govt. Institutions, Pharmaceutical and Biotech companies, Hospitals and Medical centers in India and overseas in field of Clinical Data Management, Gene Sequence Analysis, Molecular Modeling and Design and Development of Drug Molecules dedicated to health sector and services like ERP (Celvision), Data Warehousing, Business Intelligence Solutions to Pharma and Biotech Companies.

The company has developed Celvision an end to end ERP solution for pharma/biotech companies and has tied up with IBM Sonata initiative venture for marketing the product. CLL has recently developed CELSUITE - A drug design tool which facilitates molecular modeling that has application in drug discovery and development process. The product has the potential to be licensed individually to clients and would also be used by Celestial to offer the drug molecule development.

The company has developed a bio-molecule by using recombinant DNA technology to treat vitiligo, a white patch skin disorder with the technological collaboration with CCMB Hyderabad, a premier CSIR Laboratory. Celestial plans to develop 3 drugs from this molecule and has filed for 2 drug molecule patents in India.

Going ahead, the company would be producing and marketing two industrially important enzymes áamylase and alkaline Protease for which the company has signed technology transfer agreement with Institute of Microbial Technology, another premier CSIR laboratory.

The company is coming with an IPO of 5 million shares at a fixed price of Rs 60. The proceeds of the issue would be utilized to part finance the following expansion plans:

Business Profile of the company

Established by the first generation entrepreneur Dr A N Singh who has been associated with biotech activity for over two decades, the company has shown a 39% CAGR in sales over last 5 years though on a lower base and has been maintaining a PAT margin of over 30%. The company operates in a high growth area of bioinformatics and is expanding into high margin business of manufacturing and sale of enzymes having diverse industrial application. Besides the Celestial lab has developed its own product Cellsuite - that would assist Drug Company in screening of drugs and drug development process by predicting active sites in a given protein, building virtual drug like molecules and screening out unfavorable structures.

Valuation

At the offer price of Rs 60 the stock is valued at 7.2 X FY 07 (pre diluted equity) and 12.4 X FY 07 (post diluted equity) EPS which is reasonable considering the growth potential of the company. We recommend the investors to subscribe the issue.

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