HDFC Sec's REview for the IPO is as follows,
SHL’s total income has grown at a CAGR of 47% over the past three years primarily driven by increase in sales volume from SHL’s manufacturing unit, which became operational during FY07. During FY 09 total income increased by 17% to Rs. 60.56 crore which was backed by overall increase in sales from traded and manufactured goods.
During FY09 SHL earned an EPS of Rs. 3.78 compared to Rs.4.55 during FY08. The dip in EPS was on account of increase in share capital on account of issue of equity shares to promoters at par coupled with moderate increase in PAT.
The small size of operations, relatively lesser experience in manufacturing, modest branded product portfolio and competitive nature of Indian formulations market, moderate profitability, longer working capital cycle, restriction on SHL’s access to export markets on certain brands and pricing at 23.6 – 27.3 times FY10 (E) EPS (some peers available at single digit P/E) makes the issue unattractive.
