IPO Update: Amar Remedies

Banking on Toothpaste to bring Smiles !

Amar Remedies has entered the capital market with an offer of 1.5 crore equity shares through 100% book building process in the price band of Rs 24-28 per equity share of Rs 10 each. The object of the issue to set up a Ayurvedic institute at Surat.
Investment Guru recommends investors to apply in the IPO. The objective should be to offload on listing. Long term Investors can hold on to the stock with a 2 years perspective to generate the real potential of the stock.

Let’s dig into the company :
The company was established in 1984 by Mr. P. Shah for developing Ayurvedic Medicines.

The company has three products at present in its portfolio with Tooth Paste segment as a major contributor. The company markets its product under brand name “AMAR”

The company cliams to produce the first Vegetarian Toothpaste.

The company has regional market share for its products mainly in Wester and eastern parts of India.

The company has ambitious plans to launch its 25 FDA approved Ayurvedic medicines in India as well as in International markets. However, the market for Ayurvedic product is dominated by niche players and the company would have to staisfy with second grade buyers for its products.

The company is a profit making company since 1995.

The company clocked revenues of 106 crores for the year ending 30-June-05 with a net profit of 6.87 crores. Net profit was up 89% compared to previuouys year, while the sales shoot up by 29%.

The pre issue EPS stood at Rs.6.16. However, post issue the EPS would come down to 2.63.

The issue comes with a post-issue P/E of 10.6 which looks reasonable given the ambitious expnasion plans of its product portfolio.

Issue opens : 25-Aug-05
Issue closes : 31-Aug-05