Glenmark Life Sciences’ Rs 1,541-crore IPO (initial public offering) entered the final day of bidding today.
Glenmark Life Sciences’ Rs 1,541-crore IPO (initial public offering) entered the final day of bidding today. The IPO has so far elicited a strong response from all pockets of investors despite the weak secondary market sentiment. A subsidiary of the publicly traded Glenmark Pharmaceuticals, the company is a developer and manufacturer of high value, non-commoditized APIs in chronic therapeutic areas with a strong partnership with global players. The company will join peers such as Divis Laboratories, Laurus Labs, Solara Active Pharma Sciences, and Shilpa Medicare on the bourses. In the grey market, shares of Glenmark Life Sciences have been trading with a moderate premium.
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Entering the final day of the subscription window, Glenmark’s IPO has so far been subscribed 5.9 times already. Retail investors have placed the most bids for the issue, subscribing their portion 9.51 times, bidding for 6.99 crore shares. Non-institutional investors have bid for the issue 3.48 times or 1.09 crore equity shares. Qualified Institutional Buyers (QIB) have bid for 1.4 times their portion or 58.65 lakh shares. The Rs 1,541 crore IPO of Glenmark Life Sciences is a mix of an offer for sale (OFS) and a fresh issue of equity shares.
Should you subscribe?
Glenmark Life Sciences has a portfolio of 120 molecules, with most of these being non-commoditized. “Commoditized are simpler molecules and non-commoditized molecules are large and complex and mainly command higher pricing than commoditized molecules,” said Ashika Stock Broking in a note. On the higher price band, Glenmark Life Sciences demands a P/E multiple of 25.1x based on FY21 post issue fully diluted EPS, the note said. Listed peers, however, are trading in the range of 30x – 60x and the industry average is at 40x. And hence Glenmark Life Sciences is seen to be valued at a discount to peers.
“GLS has a good performance execution and clean regulatory track record. Given the healthy growth prospects, a leading manufacturer of select high-value non-commoditised APIs in chronic therapies, expanding manufacturing facility, expanding R&D infrastructure, servicing new markets, explore new product, strong financials, healthy balance sheet and strong promoter backing with synergies augur well for the company’s performance going forward. Hence, it is recommended to “SUBSCRIBE” the issue,” Ashika Stock Broking said.
At the upper price band, analysts at Prabhudas Lilladher say the company is attractively valued at 22.1x FY21 PER. The brokerage firm also has a ‘Subscribe’ rating on the issue. Leading manufacturing capabilities in key APIs, strong relationship with global clients, cost leadership, quality-focused compliant production & R&D infrastructure, and experienced management team are seen as positive for Glenmark Life Sciences.