Supriya Lifescience Ltd, an Indian producer and dealer of lively pharmaceutical ingredients (APIs), will open its Rs 700-crore preliminary public offering (IPO) on December 16. The trouble will near on December 20.
The organisation has a gap product basket of 38 APIs throughout antihistamine, analgesic, anaesthetic, vitamin, anti-asthmatic and anti-allergic therapies.
It is India’s biggest exporter of Chlorpheniramine Maleate, an anti-allergic reaction drug, and Ketamine Hydrochloride, a popular anaesthetic.
The organisation changed into amongst the most important exporters of Salbutamol Sulphate, that’s used to deal with asthma, contributing to 31 percentage of API shipments from India in FY21 in extent terms.
Its merchandise are registered with numerous global regulatory government inclusive of americaA Food and Drug Administration, European Directorate for the Quality of Medicines and HealthCare and China’s National Medical Products Administration.
As of October 31, Supriya Lifescience exported merchandise to 1,296 clients in 86 nations via a community of 346 distributors.
The organisation’s production facility is in Parshuram Lote, Maharashtra, approximately 250 km from Mumbai.
About the IPO
The Rs 700-crore IPO entails a sparkling trouble of stocks really well worth Rs two hundred crore and an offer-for-sale of stocks for Rs 500 crore through promoter Satish Waman Wagh, who holds a 99.26 percentage stake withinside the organisation. The promoter group’s protecting is 99.ninety eight percentage.
The stocks with a face cost of Rs 2 may be presented at Rs 265-274 apiece.
Investors can bid for not less than fifty four stocks and multiples of fifty four stocks thereafter. Retail traders can make investments not less than Rs 14,796 for one lot, and their most funding is Rs 1,92,348 for thirteen lots.
The allotment of stocks may be determined through December 23. Unsuccessful traders gets refunds through December 24 and a hit bidders gets stocks credited to their demat bills through December 27.
The stocks of Supriya Lifescience will listing at the BSE and the National Stock Exchange on December 28.
The organisation will use the proceeds from the sparkling trouble to fulfill capital expenditure necessities and pay off debt, except different popular company purposes.
Brokerage views
Brokerages are constructive approximately Supriya Lifescience and feature given a nice score to the trouble, primarily based totally on its international presence and lengthy relationships with clients, which is a great supply of repeat enterprise.
The organisation’s consciousness on studies and improvement has helped it to diversify and input the high-margin enterprise and the backward integration of API guarantees a constant deliver of intermediates.
Experts stated the worldwide pharmaceutical enterprise will increase at a compound annual boom charge of approximately five percentage and could reach $1,585-1,625 billion through CY25 from $1,270 billion in CY20. This offers enough possibility for Supriya Lifescience to growth its scale and preserve boom.
“The organisation is growing its publicity to high-margin regulated markets, so that it will guide its running margins,” brokerage company Arihant Capital Markets stated in a report.
The extra land and backward integration plans augur properly for the organisation.
However, the enterprise is situation to substantial law and failure to conform with or renew statutory and regulatory licences, allows and approvals can adversely have an effect on enterprise operations, the brokerage stated.
“At the higher charge band of Rs 274 in keeping with share, the organisation is worth a P/E a couple of of 16x primarily based totally on FY21 EPS of Rs 16.9,” that’s an appealing valuation, stated Arihant Capital, which advocated traders to “subscribe” to the IPO.
“The organisation demonstrates a sustained development in its scale of operations and earnings margins and correctly manages its operating capital necessities, thereby reflecting excellent development in utilisation ranges and unfastened coins balances,” BP Equities stated in its report.
On the turn side, its global operations reveal the organisation to complicated management, legal, tax and monetary dangers, that could adversely have an effect on its enterprise, outcomes of operations and monetary condition.
Customers might also additionally begin production their very own APIs, that’s a chance due to the fact the organisation is depending on a confined variety of clients for a giant part of its sales.
However, BP Equities stated, “The trouble is attractively priced on the higher quit of the charge band at a PE of 16.2 (primarily based totally on FY21 earnings), that’s at a giant cut price to its indexed friends with comparable go back and margin profile. Hence, we advocate a ‘subscribe’ score in this trouble.”
“The organisation has de-risked its enterprise version with extensive geographical presence, diverse product portfolio, catering to numerous healing areas,” Choice Broking stated in its report.
Supriya Lifescience has validated a healthful worthwhile enterprise boom with strong running cashflows and in view that inception it has mentioned a nice running cashflow, it added.
Possible dangers
However, the organisation is uncovered to dangers from destructive foreign exchange movements, destructive product mix, and dangers from focused product and sales mix.
“At better charge band of Rs 274, the organisation is disturbing a P/E a couple of of 17.8x (to its FY21 incomes of Rs 15.4), that’s at a reduction to the peer common of 31.4x,” Choice Broking stated. It assigned a “subscribe” score to the trouble, locating it to be attractively priced.
Marwadi Financial Services stated the organisation generates a giant part of its sales from its pinnacle 10 clients through promoting its pinnacle 10 APIs and associated merchandise. This poses a chance to the organisation as any shift in consumer alternatives ought to effect its enterprise.
“Considering the FY21 adjusted EPS of Rs 15.39 on a post-trouble basis, the organisation goes to listing at a P/E of 17.81x with a marketplace cap of Rs 2,205 crore, even as its friends particularly Divis Laboratories and Aarti Drugs are buying and selling at a P/E of 56.3x and 25.5x,” the brokerage stated.
It assigned a “subscribe” score to the IPO, pronouncing the organisation has giant scale with management function throughout key and area of interest merchandise and is to be had at affordable valuation in comparison to its friends.
