IPO Analysis of Zenith Drugs Limited

What Zenith Drugs Ltd. Do?

Zenith Drugs ltd, is pharmaceutical company specialising in manufacturing & trading high-quality, affordable medicines, including generic drugs.

Zenith Drug’s Product Portfolio includes

 
Zenith Drugs Strengths

This Upcoming pharma IPO, exports its goods to nations like Malawi, Mauritius, Mozambique, Sudan, Tanzania, Bhutan, Cambodi in Southeast Asia, Tajikistan, Liberia, Sierr Leone, & Conakry. It also distributes items to Costa Rica in Central America, Caribbean, & Pacific.

White label manufacturing, or third-party manufacturing, is Zenith Drugs Limited's are of expertise. It serves prestigious pharmaceutical businesses like Ajanta Pharma, Bio Medical Laboratories & Zest Pharma, among others.

Zenith Drugs Limited Financials

 
Analysis

1. Assets

• Company's total assets have shown consistent growth trend over past few periods, increasing from 6,858 lakh to 11,249 lakh from Mar-22 to Sept-23.
• This indicates that company is investing in its operations, expanding its asset base, or possibly acquiring additional assets to support its growth initiatives.

2. Revenue

• Revenue has experienced fluctuations over periods, with quite decrease, such fluctuations may indicate changes in market conditions, shifts in demand for company's products or services, or impact of external factors affecting sales performance.

3. Profit After Tax (PAT)

• Zenith profit after tax has shown variability, increasing from 313 lakh in Mar-22 to 539 lakh in Sep-23.
• This indicates improvements in company's profitability over time, possibly due to cost optimization efforts, revenue growth, or other operational efficiencies.

4. Net Worth

• Zenith Drug’s Net worth has demonstrated consistent growth, rising from 1,209 lakh in Mar-22 to 2,265 lakh in Sep-23.
• This suggests that company's overall financial position & equity base have strengthened, which is positive indicator for investors.

5. Reserves & Surplus

• Reserves & surplus have fluctuated over periods, declining from 1,169 lakh in Mar-22 to 1,065 lakh in Sep-23.
• This may reflect changes in retained earnings, dividend distributions/other factors impacting accumulation of reserves over time.

6. Total Borrowing

• Zenith’s borrowing has increased steadily, reaching 2,903 lakh in Sep-2023 from 1,881 lakh in Mar-2022.
• While increased borrowing can provide financing for growth opportunities, it also indicates higher leverage & potential risks associated with debt servicing.

Overall, while company has shown positive trends in metrics such as assets, profitability, & net worth, fluctuations in revenue & reserves highlight one need to further analyse the company to understand underlying factors driving these changes. 

Zenith Drugs Key Performance Indicators

 
Analysis

1. EBITDA Margin

• Zenith Drug's EBITD margin has improved from 8.7% in FY-21-22 to 9.6% in FY-22 to 23, indicating better cost management & operational efficiency.
• This improvement suggests that company is generating higher earnings from its core operations, which is positive sign for investors.

2. PAT Margin

• Zenith Drug's PAT margin has increased from 3.4% in FY-21 to 22 to 4.6% in FY-22 to 23, indicating enhanced profitability & effective control over expenses.
• This improvement reflects company's ability to generate more bottom-line earnings for each unit of sales, which is favourable for shareholders.

3. Return on Equity

• Zenith Drug's RoE has shown significant growth, rising from 29.8% in FY 2021-22 to 35.9% in FY 2022-23.
• This indicates that company is efficiently utilizing shareholders' funds to generate profits, which enhances shareholder value & demonstrates strong management performance.

4. Return on Capital Employed

• Zenith Drug's RoCE has slightly increased from 21.4% in FY 2021-22 to 22.3% in FY 2022-23, albeit at slower rate compared to RoE.
• While RoCE growth is positive, it suggests that company may need to further optimize its capital allocation strategies to enhance profitability.

Conclusion

Zenith Drug has shown commendable improvements in key metrics of financial, expressing enhanced profitability & operational performance. Investors should view these positive trends as positively pushing signs of company's growth potential. Additionally, one need to monitor future management strategies & financial reports will be essential for making sound investment decisions.