News

Published: October 7, 2023
Updated: October 7, 2023

Valiant Labs Soars 22% on Debut, Reflecting Strong IPO Response

Valiant Laboratories, a commodity chemicals company, made a remarkable debut on the stock exchanges, with its shares surging 22% above the issue price.

A Promising Debut:

Valiant Laboratories began trading on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) with significant premiums over its issue price. On the NSE, the stock opened at Rs 162.15, marking a 16% premium to its issue price of Rs 140 per share. Meanwhile, on the BSE, it debuted at Rs 161, a 15% premium.

Locking at the Upper Circuit:

The enthusiasm for Valiant Labs' stock continued post-listing, with shares frozen at the 5% upper circuit at Rs 170.25 by 10:03 AM, extending its gains to 22% above the issue price. The stock opened at Rs 169.05 on the BSE and remained locked at the upper circuit. Trading volumes saw a significant surge, with a combined 3.3 million equity shares changing hands, and around 1 million pending buy orders on both NSE and BSE.

IPO Success:

Valiant Labs' Initial Public Offering (IPO) received overwhelming investor interest, with a subscription rate of 29.76 times. Non-institutional investors showed robust demand, subscribing 73.64 times, while qualified institutional buyers (QIB) subscribed 20.83 times. Retail individual investors also participated actively, with a subscription rate of 16.06 times.

Analyst Perspective:

Experts attributed the IPO's success to factors like the company's improving financial performance, experienced promoters, and a reasonable IPO price. However, she also cautioned investors to consider potential risks, including the company's single-product focus and competitive industry landscape, advising those with a long-term perspective to set a stop loss at 150.

Utilization of Proceeds:

The IPO proceeds are earmarked for establishing a specialty chemicals manufacturing facility in Gujarat through Valiant Advanced Sciences Private Ltd, a subsidiary. Additionally, the funds will be utilized to meet the working capital requirements of the subsidiary company.

Diversification and Growth:

Valiant Labs primarily focuses on manufacturing paracetamol, a widely used pharmaceutical ingredient. The company aims to tap into the growing demand for paracetamol API, expecting a CAGR of 5-7% between fiscal 2023 and fiscal 2027. Diversification into speciality chemicals will expand its revenue streams and bolster growth.

Reducing Import Dependency:

Valiant Labs has strategically reduced its dependence on imported raw materials. Import reliance for manufacturing paracetamol fell from 74.86% in FY21 to 11.87% in FY2023. However, it remains reliant on sales of its single product, paracetamol, making it susceptible to shifts in industry dynamics and demand.

Valiant Labs' impressive debut and strong IPO response reflect investor optimism in the company's growth prospects. As it ventures into specialty chemicals and endeavours to reduce import dependency, the company is poised for further expansion and diversification in the pharmaceutical and chemical sectors.