Glenmark Life Sciences IPO opens today: Should you subscribe? Brokerages weigh in

Glenmark Life Sciences IPO opens today: Should you subscribe? Brokerages weigh in

FPJ Web DeskUpdated: Tuesday, July 27, 2021, 10:17 AM IST
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The initial public offer (IPO) will have fresh issue of equity shares worth up to Rs 1,060 crore and sale of up to 63 lakh equity shares by Glenmark Pharma. |

Glenmark Life Sciences Ltd. (GLS), the subsidiary of pharma major Glenmark Pharmaceuticals Ltd., is planning to raise up to Rs 1,500 crore through an IPO. The issue, with a price band of Rs 695-720 a share will open today (July 27) and conclude on July 29.

The initial public offer (IPO) will have fresh issue of equity shares worth up to Rs 1,060 crore and sale of up to 63 lakh equity shares by Glenmark Pharma.

GLS said it has raised Rs 454 crore from anchor investors ahead of its initial share sale, which opens for public subscription on Tuesday.

The company has decided to allocate 63,06,660 equity shares to 19 anchor investors at Rs 720 a share, aggregating to Rs 454 crore, according to a regulatory filing.

HSBC Global Investment Funds, Government Pension Fund Global, Oaktree Emerging Markets Equity Fund LP, Copthall Mauritius Investment Ltd -ODI account, Societe Generale-ODI, Kuber India Fund and Reliance General Insurance Company are among the anchor investors.

Proceeds from the fresh issue will be used towards payment of outstanding purchase consideration to the promoter for the spin-off of the API business and funding the capital expenditure requirements.

At the upper end of the price band, the IPO will fetch Rs 1,513.6 crore.

A few brokerages have given a 'Subscribe' rating to the IPO.

Hem Securities has assigned a 'Subscribe' rating and said, the company is bringing the issue at price band of Rs 695-720 per share at p/e multiple of 25 on post issue FY21 eps. The company has leadership in select high value; non-commoditized APIs in chronic therapeutic areas enjoys strong relationships with leading global generic companies. Also, the company's quality-focused compliant manufacturing and R&D infrastructure, strong focus on sustainability in operations along with cost leadership across products demonstrates its strong fundamentals.

ICICI Securities has assigned a 'Subscribe' rating and pointed out the positives stating, GLS has a good performance execution and clean regulatory track record. The company is also a leading developer and manufacturer of select high value, non-commoditised APIs in chronic therapies and works with 16 of the 20 largest generic companies globally. The growth momentum also has a strong undercurrent of global API industry growth.

Choice Broking has assigned a 'Subscribe' rating. It pointed out the positives stating that the company's leadership in select high value, non-commoditized APIs in chronic therapeutic areas, strong relationships with leading global generic companies, quality-focused compliant manufacturing and R&D infrastructure, strong focus on sustainability in operations, cost leadership across products through careful monitoring and continuous effort, and experienced management team with proven track record.

Investmentz.com said with its superior product mix, established brand name, among others, the brokerage believes the company is well placed to capitalize on domestic and global opportunities. "At the upper price band of Rs.720/-, stock is valued at 25x of FY21 Earnings of Rs.28.7(based on fully diluted post issue equity). We recommend to subscribe the issue from a long-term prospective."

Ventura said, "We initiate coverage with a Subscribe for long-term investing. Our target price of Rs 1,039 (18X FY24 earnings) represents a potential upside of 44 percent from the offer price of Rs 720 over a period of 18-24 months. The business environment, futuristic product portfolio, success in new product development and planned capacity expansions bolster our confidence in sustaining growth, margins and return ratios over the forecast period."

Anand Rathi said, at the upper end of the IPO price band, Glenmark Life Sciences Ltd. is offered at 25.09x its FY21 earnings, with a market cap of Rs. 88,219 million. "Given the company’s leadership in select high value non-commercialized APIs in chronic therapeutic areas, cost leadership, strong management, strong balance sheet, growing business, high RoNW of 46.71 percent in the fiscal ended March 31, 2021 and reasonable valuations; we give this IPO a Subscribe rating".

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