Techno Drugs Limited, a prominent manufacturer of human and animal healthcare products in Bangladesh, is set to begin trading on the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) under the ‘N’ category next Sunday.
This follows the company's successful Initial Public Offering (IPO) where it raised Tk 100 crore through the Book Building method.
A recent report by BRAC EPL Stock Brokerage highlighted the financial performance of Techno Drugs from FY2018-19 to FY2022-23, showing a period marked by notable fluctuations in growth, profitability, liquidity, leverage and operational efficiency.
The company's revenue growth experienced a significant decline of 7 per cent in FY19, followed by a remarkable recovery with a 90.7 per cent increase in FY2019-20.
This growth trend continued in FY2020-21 with a 30.9 per cent rise but then plummeted by 45.6 per cent in FY23. Operating profit showed similar volatility, with a 70.1 per cent surge in FY20 and a 42.2 per cent drop in FY23.
Net profit peaked with a 120.6 per cent increase in FY21 before falling by 59.3 per cent in FY23.
Profitability ratios also fluctuated during this period. The gross margin remained relatively stable between 36.1 per cent and 42.4 per cent, while the net margin and return on equity exhibited more pronounced changes.
The net margin reached 10.5 per cent in FY19 but dropped to 7.2 per cent by FY23. Return on equity peaked at 29.2 per cent in FY21, then sharply declined to 7.8 per cent in FY23.
The company’s IPO received regulatory approval from the Bangladesh Securities and Exchange Commission (BSEC) on March 7. The company raised Tk 100 crore for business expansion and loan repayment.
The IPO proceeds will be utilised for purchasing new machinery (Tk 27 crore), expanding the existing factory in Narsingdi (Tk 25 crore), repaying bank loans (Tk 30 crore), and constructing a new production unit in Gazipur (Tk 15 crore), with the remainder covering IPO expenses.
The cut-off price for Techno Drugs' shares was set at Tk 34 through electronic bidding by institutional investors from April 21 to April 24, 2024. General investors, including non-resident Bangladeshis, acquired shares at a 30 per cent discount, priced at Tk 24 each.
The IPO subscription, held from June 10 to 13, was oversubscribed by 24.64 times, receiving Tk 248 crore against the Tk 100 crore IPO shares, according to the DSE.
Each general investor was allocated 11 IPO shares, while non-resident Bangladeshis received 20 shares per Tk 10.
Techno Drugs Limited, which was incorporated in September 2009 and commenced commercial operations in July 2010, has made significant strides in the pharmaceutical sector.
In 2018, it launched the first contraceptive injectable plant in Bangladesh and, by 2019, became one of the five firms worldwide producing contraceptive implants. The company is a major supplier of contraceptive hormonal medicine to the Bangladesh government. Its factories are situated in Narsingdi and Gazipur, with multiple depots nationwide.
The pharmaceutical industry in Bangladesh, valued at $3.5 billion and growing annually at 11 per cent, contributes 1.83 per cent to the country's GDP, according to BRAC EPL Stock Brokerage.
Local manufacturers meet 98 per cent of the domestic demand, while the industry relies heavily on imports for raw materials, with 90 per cent sourced from China and India.
To mitigate sourcing volatility, the government is establishing an API park in Gazipur to support the sector, said BRAC EPL Stock Brokerage.
