Glenmark Life Sciences, another pharma stock is all set to hit the bourses on Friday. The much-awaited stock will get listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on August 6 at 10 am. The wholly-owned subsidiary of Glenmark Pharmaceuticals has received a strong response from the investors during its subscription period from July 27-29. The Rs 1,513.6-crore public issue of the company was subscribed 44.17 times. Overwhelming response from the traders, reasonable valuation, strong company financial and positive market sentiment indicate a reasonable listing for Glenmark Life Sciences IPO on Friday. Glenmark Life Sciences stock is expected to see the listing premium of around 10-15 percent over its final issue price of Rs 720.
Ahead of the listing, the Glenmark Life Sciences share were commanding a price of Rs 85 on the grey market, which is about 12 per cent over the issue price. The unlisted stocks were trading at Rs 805 on Friday. It must be mentioned that the unlisted stocks had witnessed a significant drop in the grey market premium in the last few days. The unlisted stocks were trading at Rs 150 a week back.
Glenmark Life Sciences initial public offering (IPO) was opened for subscription in the last leg of July with a price band of Rs 695-720 per share. The IPO received bids of over 66.33 crore shares against the total issue size of over 1.50 crore shares, according to the data available with the National Stock Exchange (NSE) showed. The portion allocated for for the qualified institutional buyers (QIBs) was subscribed 36.97 times, while those of non institutional investors was subscribed a whopping 122.54 times. The retail quota reserved for retail individual investors (RIIs) was booked 14.63 times, the data showed.
The Glenmark Life Sciences IPO has a total size of Rs 1,513.6 crore comprising of a fresh issue of equity shares worth Rs 1,060 crore and an offer for sale (OFS) comprising of up to 63 lakh equity shares worth Rs 453.6 crore by Glenmark Pharma.
Glenmark Life Sciences is a leading developer and manufacturer of select high value, non-commoditized active pharmaceutical ingredients (APIs) in chronic therapeutic areas, including cardiovascular disease, central nervous system disease, pain management and diabetes. It also manufactures and sells APIs for gastro-intestinal disorders, anti-infectives and other therapeutic areas.
Most analysts recommended subscription rating for the Glenmark Life Sciences IPO considering the company’s future prospects. The company, the wholly-owned subsidiary of pharma major Glenmark Pharmaceuticals is well-placed in the Active Pharmaceutical Ingredient (API) business, analysts said.
“Based on FY-2021 PE of 22x and EV/EBITDA of 12.9x 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 & Dahej will be the next growth driver for the company,” said Yash Gupta, equity research associate, Angel Broking Ltd.
“Given its strong focus on R&D expansion plans, leadership in select high-value non-commoditized APIs in therapeutic areas, solid clientele and growth opportunities in CDMO services provide a strong outlook for the company. At the upper price band of Rs 720, GLSL is available at a P/E of 25x (diluted) which appears fairly priced. Considering its robust growth in financials, fall in D/E, rise in future capacity and future product portfolio, the stock can be considered on a long-term basis,” said Vinod Nair, head of research at Geojit Financial Services.