Bafna Pharma
Bafna Pharmaceuticals has entered the capital market on 27th May 08 with a public issue of 64 lakh equity shares of Rs.10 each at a premium of Rs.30 per share with an issue size of Rs.25.60 crores.
The greed of the promoters of the company has really spoiled the financial health of the company. Paid-up equity of the company ballooned from Rs.2.87 crores (as at 31-03-07) to Rs.9.58 crores (as at 31-12-07), which would rise to Rs.15.98 crores, post issue, largely due to bonus issue of Rs.2.32 crores and fresh issue of Rs.3.40 crores which has merely contributed share premium of Rs.89 lakhs. Strangely, Capital Structure shows share premium before the public issue only at Rs.71 lakhs in the Prospectus. Due to this, book-value per share stood at Rs.12.50.
Considering FY07 financial performance of the company, which had an EPS of Rs.2.50, share, share is now being issued at a PE multiple of 16 times. Results for first 9 months ending 31-12-07, even presents depressing results wherein topline was at Rs.25 crores with PAT of Rs.1.30 crores which translates into an annualized EPS of Rs.1.80 only. Strangely, on 01-10-07. The company had issued shares at three different rates of Rs.10, Rs.20 and Rs.30 to promoters as well as non-promoter shareholders. Difficult to accept.
The financial performance of the company is pathetic to say the least. For FY06, total income of the company was at Rs.21.36 crores on which PAT was at Rs.85 lakhs. In FY07, total income rose to Rs.38.62 crores with PAT of Rs.97 lakhs. But the rise in bottomline has happened due to profit on sale of fixed assets of Rs.63.46 lakhs. Even sundry debtors as at 31-03-07 were at Rs.18.40 crores representing sales of 175 days.
It worsened for 9 months ended Dec. 07 wherein total income was at Rs.24.70 crores with PAT of Rs.1.30 crores. Sundry debtors as at 31-12-07 were at Rs.20.61 crores representing sales of 225 days. Debt equity ratio of the company at 31-12-07 were close to 2 : 1.
Considering an annualized EPS of less than Rs.2 for FY 08 it results in a PE multiple of 20 times while similar companies are ruling at a PE multiple between 4 to 6 times with much better credentials. Also, only BSE listing is another dampener.
If we have these kind of issues coming to the market, it will definitely spoil it or may revive speculative activity on listing, which is being witnessed in some of the issues that have tapped the capital market recently.
Fundamentally, share is not worth even at Rs.20 per share.