Shares of Supriya Lifescience surged 20% intra-day on Wednesday after a bumper listing on Tuesday. The stock hit a high of Rs 468.40 on the BSE, more than 70% higher than the issue price of Rs 274. The scrip on Tuesday listed at Rs 425 on the BSE, a 55% premium over the issue price. According to experts, strong fundamentals of the company, justified valuations and strong subscription during the share sale were reflected in the market debut. The scrip ended at Rs 463.05 on the BSE on Wednesday, up 18.6%.
The initial public offering (IPO) of the company was subscribed a little above 71 times. The company successfully raised Rs 700 crore through the maiden public offer and it intends to utilise the proceeds for debt repayment and capital expenditure requirements.
All leading brokerage houses had advised investors to subscribe to the IPO as the fundamentals of the company are intact, and the stock is available at a reasonable valuation to its peers. Considering the FY21 adjusted EPS of Rs 15.39 on a post-issue basis, the company commands a P/E of 17.81x, which is relatively lower than its listed peers like Divis Laboratories (56.3x) and Aarti Drugs (25.5x).
Sneha Poddar, AVP – retail research, Motilal Oswal Financial Services, said: “It has a niche product portfolio of 38 APIs with focus primarily on diverse therapeutic areas. It has consistently been India’s largest exporter of certain niche products with well-balanced presence between regulated and semi/non-regulated markets. We like Supriya for its niche product portfolio, backward integrated business model and robust financials. It is well placed to tap opportunity in the pharma API market given its strong pipeline focused on further diversification.”