The initial public offer (IPO) of Glenmark Life Sciences has been subscribed 3.27 times on July 28, the second day of bidding.
According to the subscription data available on the exchanges till 15:25 IST, the offer has received bids for 7,04,04,020 equity shares against the IPO size of over 2,15,51,798 equity shares.
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.
Considering the FY-21 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.88,220 mn, 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,” said analysts at Marwadi Financial Services.
Analysts have given a ‘subscribe’ rating to the issue as the company is a leader in select high value, non-commoditized APIs in chronic therapeutic areas with quality-focused & compliant manufacturing / R&D infrastructure and is available at reasonable valuation as compared to its peers.
Yash Gupta Equity Research Associate at Angel Broking said,”Based on FY-2021 PE of 22x and EV/EBITDA of 12.9 times at the upper price band of the IPO price, valuations are slightly better than the peer companies. Similarly, the company has one of the best ROCE of 32.7%. Company has a healthy balance sheet and will be net debt free after the IPO. We expect the upcoming expansion plan in Ankleshwar and Dahej will be the next growth driver for the company. We are assigning a “Subscribe” recommendation to the issue.”
The IPO comprised fresh issue of equity shares worth up to Rs 1,060 crore and sale of up to 63 lakh equity shares by Glenmark Pharma. The firm plans to raise Rs 1,513.6 crore at the upper end of the price band of IPO.
A day ahead of the IPO on July 26, Glenmark Life Sciences raised Rs 454 crore from anchor investors. The company would allocate 63,06,660 equity shares to 19 anchor investors at Rs 720 a share, aggregating to Rs 454 crore.
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 were among the anchor investors.
Allotment of shares is likely to be done on August 3, 2021.
