Valiant Laboratories, a material subsidiary of Valiant Organics, a specialty chemicals manufacturing company, is set to launch its Initial Public Offering (IPO) on September 27, as per an exchange filing made by Valiant Organics. The IPO aims to issue 1.08 crore fresh shares and will conclude on October 3, 2023. Valiant Laboratories had submitted a Red Herring Prospectus (RHP) document to the market regulator SEBI on September 18.
The anchor investor bid period for this IPO will open on September 26. Valiant Laboratories intends to utilize the IPO proceeds to invest in its wholly-owned subsidiary, Valiant Advanced Sciences Pvt. Ltd., to partially finance its capital expenditure for establishing a specialty chemicals manufacturing facility in Gujarat. Additionally, the funds will be allocated for meeting working capital requirements and general corporate purposes.
Here are some of the risk factors highlighted in the DRHP (Draft Red Herring Prospectus):
1. Lack of long-term agreements with suppliers for raw materials. A significant portion (99.62 percent) of raw materials in fiscal 2023 was procured from the top 10 suppliers.
2. Potential delays or cost overruns in setting up the proposed facility could have a substantial impact on the company’s financial condition.
3. Valiant Laboratories is a single-product manufacturing company, and any changes in the paracetamol API industry could affect its financial performance.
4. The majority of the company’s operating income (99.6 percent in fiscal 2023) is derived from the domestic market.
5. The company relies on a few customers for a significant portion of its revenue, with 42.6 percent of fiscal 2023 revenue coming from the top 10 customers.
Investors considering participation in Valiant Laboratories’ IPO should carefully assess these risk factors as part of their investment decision-making process.
