Bumper listing for Supriya Lifescience: Stocks begin trading 55% above IPO price on debut

The Rs 700 crore Supriya Lifescience IPO was subscribed 71.51 times earlier this month.

Supriya Lifescience
Supriya Lifescience share price opened at a premium to the IPO price. (Image: REUTERS)

Supriya Lifescience shares made a bumper listing on stock exchanges today amid positive market sentiment. Shares of the active pharmaceuticals ingredients (API) manufacturer started trading at Rs 425 per share, 55.11% or Rs 151 apiece higher than the upper end of the price band of Rs 274 per share. The Rs 700 crore public issue of Supriya Lifescience was a mix of fresh issuance of equity shares and an offer for sale (OFS) by existing shareholders. The company is a manufacturer and supplier of APIs, with a focus on research and development. Supriya Lifescience had a market capitalization of Rs 3,420 crore on opening. 

The Rs 700 crore Supriya Lifescience IPO was subscribed 71.51 times earlier this month with Non-Institutional Investors (NII) bidding for their portion 161.22 times. The retail portion was subscribed 56 times and the QIB portion was bid for 31.83 times. Shares were offered in a fixed price band of Rs 265-274 per share. Post issue, promoter shareholding in the company will come down to 68.24% from 99.98% prior to the public issue. The public shareholding will therefore increase to 31.76% from 0.02% pre-IPO.

“Supriya owns 38 APIs focused on diverse therapeutic segments along with being the largest exporter of Chlorpheniramine Maleate and Ketamine Hydrochloride from India. At the upper price band, it is valued at ~13.3x EV/EBITDA and ~17.8x P/E for FY21,” said analysts at ICICI Direct. The brokerage firm did not rate the IPO. Funds raised through the IPO will be used by the company to fund capital expenditure requirements and for the repayment and pre-payment, in full or part, of certain borrowings.

Analysts at Religare Broking valued the issue at 17x FY22 post issue annualized EPS. They added that from a long term perspective, they had a positive view on the company. “Supriya stands to benefit from the positive industry growth trends given that it has a significant scale with a leadership position across key & niche products. Its backward integration of API ensures a steady supply of intermediates. Moreover, it has geographically diversified revenues with a global presence across 86 countries,” they added.

Supriya Lifescience has seen steady growth in net profit between the financial year 2018 and the previous fiscal year. According to Choice Broking, the company’s net profit grew at a CAGR of 142.1% between the financial year 2018 and the financial year 2021. Choice Broking said that the issue demanded a P/E multiple of 17.8x (to its FY21 earning of Rs 15.4), which is at discount to the peer average of 31.4x. The brokerage firm had a subscribe rating on the issue.

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