29 Jul , 2021 By : Kanchan Joshi
NEW DELHI: The Rs 1,514 crore initial public offer of Glenmark Life Sciences continued to receive strong response on Thursday, which is the third and final day of bidding for the issue.
As of 11.05 am, the issue was subscribed 4.68 times, with applications received for 10,09,18,800 shares out of total on offer 1,50,18,279 shares.
Most analysts are positive on the company's future prospects and suggest subscribing to the issue. They believe the company, which is a spin off of Glenmark Pharma, is well-placed in the Active Pharmaceutical Ingredient (API) business.
Considering the FY21 adjusted EPS of Rs 28.69 on post issue basis, the upper price band implies a P/E of 25.09 with a market cap of Rs 8,822 crore, while its peers namely Divi’s Laboratories, Laurus Labs and Shilpa Medicare are trading at a P/E of 64.0, 36.1 and 36.5 respectively.
“Based on the forecasted FY24E earnings, the demanded valuation comes out to be 11.4x, which seems to be attractive for a company generating a RoE of around 20 per cent considering the business growth outlook and almost stable operating margins,” said Choice Broking.
The company currently operates four multi-purpose manufacturing facilities which are situated on leasehold properties located at Ankleshwar and Dahej in the state of Gujarat, and Mohol and Kurkumbh in the state of Maharashtra.
The global API market was estimated to be around $181.3 billion in FY20 and is expected to grow at a CAGR of 6.2 per cent by FY26. Glenmark Life’s key customers include Glenmark, Teva Pharma Industries, Torrent Pharmaceuticals, Aurobindo Pharma, Krka etc.
The price band of the offer has been fixed at Rs 695-720. Out of shares available for sale, 50 per cent will be reserved for qualified institutional investors, 35 per cent for retail and 15 per cent for HNIs.
The proceeds from the offer for sale will go to the selling shareholders, while the amount received from the sale of fresh issue will be utilized for payment of outstanding purchase consideration to the promoter for the spin-off of the API business (Rs 800 crore), funding capital expenditure requirements (Rs 153 crore) and general corporate purposes.
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