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

17 comments:

Anil Kumar said...

Thanks for your recommendation, it is realy great.

But this IPO option is not available through ICICI Direct. Could you please tell how to apply.

Thanks

Anonymous said...

You can apply by filling the application form available through brokers like karvy, ILFS etc.
Question for Rajesh: What listing levels can we see for this scrip?

Anonymous said...

Hi Anil Kumar,
If you have kotak street/sharekhan online account,you can apply online amar remedies..

b4uleap said...

Hi,
All of us trying to make some money in the IPOs at regular intervals.It has been good in the recent past with most issues giving good post listing gains.Very few have failed to deliver.This has fueled a herd mentality that we must somehow apply in large numbers/multi apps in family member's names, borrow money to apply for more number of shares etc.It is possible that we can get stuck with large number of shares on allotment.More so when there is hype but not much in the company.
Is Amar remedies one such?
The name 'remedies' will make you feel that it is into pharma sector whereas it is making toothpaste and toothpowder.The brand is hardly known.One of the major objects is to fund brand building at an expense of Rs350 lakhs.This brand building exercise is a CERTAIN MONEY GOBBLER WITH RESULTS UNKNOWN.How much do the MNC's spend on ads and what has been happening to the FMCG sector is well known.Even HLL is a laggard.Will you buy this Amar's toothpaste after seeing the commercial/ad??Another huge expense item from the IPO proceeds is issue expense of Rs350 lakhs which is a total write-off.The total of these two alone is a whopping Rs 700 lakhs.It is 7 crores of our money which will go SWOOOOOSH down the drain.

At 1 PM on 26th august the second day of the IPO, the NSE website shows an oversubsription of 1.17 times only.The domestic finanacial institutions,mutual funds,insurance companies had not put a single bid on the opening day.Normally they are the first off the block.Do they know something that we don't?If this trend continues retail applicants may get their full quota.When there is no appetite now where will it come at the time of listing?And remember all of us want to get out on listing with GOOD GAINS!All at the same time wanting to exit and where will the buyers be?Looking at the prices coming down by the minute!When panic sets in, it can only go down and down.
Be patient with your good money.Better issues will certainly come your way.It is not like if we do not apply for AMAR it is the end of the world or there is no tomorrow.A FOOL AND HIS MONEY ARE EASILY PARTED is what the wise said centuries ago.
Do share your thoughts on this please.

Raghav said...

Hi Mr. Leap,
If you read Rajesh's write-up carefully, the major earnings are coming from exports for the company. So absence of a brand name do not matter much. As far as subscription is concerned, I am sure this tock will be oversubscribed at leat 20 times.
Rajesh, your comments please ?

Anonymous said...

I am going to apply Rs.50000/- on this issue. expecting a return of at least Rs. 10 per share.
Murthy

Anonymous said...

Hi rajesh
Request your expert advice on the Talbros IPO.
Thanks

Anonymous said...

http://itspraf.blogspot.com/

b4uleap said...

Mr Raghav,
I am happy that you have gone through Mr Rajesh's write up very carefully.I would have been happier if you had also gone through the company's own aplication form.As of 30.06.2005 the export sales of the compnay reflected in their form were Rs507 lakhs against a total sale of Rs10,678.17 lakhs.Can a 4.75% export sale be called "major earnings of the company"?And going further by your logic, "the absence of a brand does not matter much for exports".If that is the case then why spend Rs350 lakhs at all!If it is for creating real assets then it is very welcome.But my point is a major portion ie Rs 7 crores are going down very easily.That is because it is the public's money.
Let's hope as you prophess, the issue get oversubscribed 20 times, (not fully subscribed for retail) so that all of us get full allotment and become super rich.
All the best.

Rajesh Soni said...

Hi b4uleap,
Thanks for popinting the export numbers for the company. I really appreciate this and that's why I encourage people to put their comments. Your observation is correct. I have modified my post to reflect this. However, the recommendation remains intact. I do see that public response to this issue is not so good, hence it would be a wise decision to aplly for the number of shares a investor is intersted in taking or at the most twice of it for those who want to play with listing.
Happy Inevsting !

Happy Investing.

raghav said...

Thnaks for the update Mr. leap.
I agree with you and Investment Guru both.

Anonymous said...

Amar Remedies IPO poll: Majority say apply

Amar Remedies IPO opened on August 25. Moneycontrol polled market experts to find out if investors should apply in this issue or not. Majority said that investors should.
from Money control

moneymasala said...

What b4uleap said is absolutely true and deserves respect. JindalPolyfilms is a case in point.
I hope b4uleap will continue to give illuminating comments such as this. Any comments on Talbros, sir?

b4uleap said...

Hi Guys,
The scene is not as bad as it was made out by me earlier.The NSE website at 5 PM on 30th shows an overall oversubscription of 2.77 times.The retail portion(applying under the cut off option)was oversubscribed 1.83 times.And we still have the slog overs left on the 31st!!A very rough estimate can get the retail segment oversubscribed between 8 and 10 times now.So you now need to worry as to how much can you get alloted.

There would be listing gains and it better be encashed.This issue somehow appears to be a tricky handshake for the medium term.

I have copied from their prospectus page 60, the following paragraph.
"The names of the brands manufactured by us are as under:
Anitadent Red Gel, Anitadent Blue Gel, Amardent Red Gel, Amardent Regular, Amardent Strong, Amardent White, Amar
Regular, Amar Strong, Amar White, Topdent Red Gel, So Fresh Red Gel, So Fresh Chalk Toothpaste, So Good Chalk
Toothpaste, Smyle Herbal Green Toothpaste, Smyle Herbal White Toothpaste, Smyle White Toothpaste, Specialment
Chalk Toothpaste, Stardent Red Gel, Stardent White Chalk Toothpaste, Snodent White Chalk Toothpaste, Snodent Semi
Gel Red Toothpaste, Snodent Semi Gel Blue Toothpaste, Titanic Chalk Toothpaste, New Smiles Red Gel, New Smiles
White Chalk Toothpaste, Nature Works Gel, Nature Works White Chalk Toothpaste, Royal Fresh Chalk Toothpaste.
We are manufacturing in total 29 different qualities of toothpaste under 15 different brand names".

Quite a mouthful!!!You will never run out of choices and variants.Which is your pick???

They will be embarking on an AIDS cure research too!refer page 46 of their prospectus/bible.From the IPO proceeds naturally.They should instead concentrate on the desi Viagra variants and if they can offer as many choices as they have for their toothpastes,man you have the next infy on your hands.

Don't snigger.Make hay while the sun shines.I need to rush to my broker to hand in my applications.
Bye for now.See you soon.

Raghav said...

Mr Leap,
I am wondering if other people would have got confused by your earlier remarks
Please exercise restrain in putting your observations. I am still hopeful that this issue will get oversubscribed by at least 10 times by tomorrow. and the listing should also be good. Even moneycontrol has advised to aplly in this issue.
Anyway, best of luck to all those who are applying in the issue. Lets take advantage of the IPo boom and add wealth to our corpus.

moneymasala said...

Intime Spectrum is the registrar to the issue. With what they did with Provogue, even if the issue is oversubcribed 1000 times, none of us will get a single share.That's what statistics say, see the reactions to Provogue on MMB

Anonymous said...

have anybody ever used Amar toothpaste?
Is not true that lately Investment Guru has become IPO Guru???