Amanta Healthcare IPO: 10 key risks you should know about before investing in ₹126 crore issue

Amanta Healthcare's initial public offering (IPO) is set to open for bidding on Monday, September 01, and will remain available to investors until Wednesday, September 3. The company aims to raise ₹126 crore through this IPO, which is entirely a fresh issue of 1 crore shares.

The price band for the IPO is fixed at ₹120– ₹126 per share. The minimum lot size for retail investors is one lot, consisting of 119 shares, requiring a minimum investment of ₹14,994. Investors can apply for a maximum of 13 lots.

The allotment of the issue is likely to be finalized on September 4, and the shares are scheduled to be listed on both BSE and NSE, with a tentative listing date of Tuesday, September 9.

Amanta Healthcare is a pharmaceutical company engaged in developing, manufacturing, and marketing a diverse range of sterile liquid products—parenteral products—being packed in plastic containers with Aseptic Blow-Fill-Seal and Injection Stretch Blow Moulding technology.

It manufactures large-volume parenterals and small-volume parenterals in six therapeutic segments. In addition to that, it also manufactures medical devices.

As the IPO set to open next week, potential investors should also be aware of the key risks outlined by the company in its Draft Red Herring Prospectus (DRHP). In this aricle, we will break down some of these risks.

High finance costs, limited raw material suppliers and rising competition are among the major risks

1. Single Manufacturing Facility Risk: The company’s entire manufacturing facility is located at a single site in Village Hariyala, District Kheda, Gujarat. Any disruption at this facility could materially impact its operations, revenues, and financial performance.

2. High Finance Costs: Finance costs remain significantly high, constituting 45.78%, 57.25%, and 62.64% of restated EBITDA for Fiscal 2025, 2024, and 2023, respectively. Inability to reduce these costs may adversely affect the company’s profitability and cash flows.

3. Dependence on Limited Raw Material Suppliers: The company relies on a limited number of suppliers for LDPE (low-density polyethylene) and PP granules (polypropylene). Price volatility, driven largely by crude oil fluctuations or loss of key suppliers, may adversely impact its business and margins.

4. Suspension of Manufacturing License: The company’s manufacturing license has been suspended in the past. Any future suspension could materially disrupt its operations and negatively affect financial performance.

5. Dependence on Imports of Raw Materials: A significant portion of raw materials, particularly plastic granules, are imported. This exposes the company to risks, including higher import duties, regulatory restrictions, global commodity price volatility, and foreign currency fluctuations.

6. Intense Industry Competition: The company operates in a highly competitive market. Inability to withstand pricing pressure or adequately respond to competition may result in loss of market share and declining revenues and profitability.

7. Exposure to International Business Risks: Exports accounted for 33.06%, 29.31%, and 30.94% of revenue from operations in Fiscals 2025, 2024, and 2023, respectively. Dependence on international markets exposes the company to legal, economic, and operational complexities, which could affect business performance.

8. Employee Attrition and Retention Challenges: The company has faced high employee attrition in the past. Inability to attract or retain skilled personnel, particularly key management staff, could adversely affect its growth and operations.

9. Uncertainty in Capital Expenditure Plans: The company intends to utilize net proceeds of ₹10,013 lakhs towards capital expenditure but has yet to place orders for a majority of these requirements. Any delay or inability to procure equipment at commercially viable terms could impact expansion plans.

10. Dividend Distribution Constraints: The company’s ability to declare dividends in the future will depend on its earnings, financial condition, working capital needs, capital expenditure, and financing arrangements.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.