Valiant Laboratories stock makes decent debut; should investors buy, hold or book profit?

Valiant Laboratories' net profit rose 5.5 percent to Rs 29 crore for the year ended March 2023 from Rs 27.5 crore in the year-ago period

After the IPO received a good response from investors, Valiant Laboratories shares listed at 15.8 percent premium on bourses on October 6. The stock debuted at Rs 162.15 on the NSE and Rs 161 on the BSE against the issue price of Rs 140. The listing met the analyst's expectations as they had predicted the stock to list at a premium of 15-18 percent over the IPO price.

Analysts attribute the decent listing to the paracetamol manufacturer’s improving financial performance, experienced promoters and fair IPO price. However, due to the risks involved, such as a focus on a single product and a limited number of suppliers, few analysts have advised investors to exit their positions.

Also Read: Valiant Laboratories lists at Rs 162, a 16% premium to IPO price

“The strong listing can be attributed to the company’s robust financial performance wherein revenue grew at a CAGR of 35.3% during the FY21-23 period. Further, the paracetamol API industry is expected to clock a 5-7% CAGR between FY23 and FY27,” said Prathamesh Masdekar, Research Analyst, StoxBox.

Masdekar believes that with strong operational efficiencies, Valiant Laboratories has demonstrated high ROCE, positive operating cash flows, a strong balance sheet, pursued growth opportunities and better managed unanticipated cash flow variations which will drive the company's performance going forward.

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Despite decent listing,  Shivani Nyati, Head of Wealth, Swastika Investmart believes that investors should carefully consider related risks as well, like the company's single-product focus, dependence on a limited number of suppliers and customers, and the competitive industry.

Valiant Laboratories' net profit rose 5.5 percent to Rs 29 crore for the year ended March 2023 from Rs 27.5 crore in the year-ago period. The revenue from operations grew by 14.5 percent to Rs 333.9 crore from Rs 291.5 crore during the same period.

Also Read: Valiant Lab IPO: 10 things to know about the issue

Should you buy, sell or hold Valiant Laboratories?

Hold shares and consider buying on dips: Stoxbox

Masdekar remains optimistic about the company and recommends investors who have received allotment to hold their shares and consider buying on dips as well from a medium to long-term perspective.

Book profits and exit positions: Swastika Investmart

“Investors are advised to book profits and exit their positions, but those who want to hold for the long term should keep a stop loss at Rs 150,” said Nyati.

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