MUMBAI: Hyderabad-based Gland Pharma’s initial public offer (IPO) to raise up to Rs 6,480 crore is scheduled to open on Monday. While analysts are upbeat on the prospects of the company and recommend subscribing to the issue, a few believe the valuations are a bit on the expensive side.
Chinese pharmaceutical giant Shanghai Fosun Pharma –controlled Gland Pharma’s IPO is India’s largest pharmaceutical IPO ever. The price band for the offer has been fixed at Rs 1,490-1,500 per share, and the issue will close on November 11.
The IPO comprises a fresh issue aggregating up to Rs 1,250 crore and an offer for sale of up to 3.49 crore shares. While China's Fosun Pharma Industrial Pte is offering to sell 1.9 crore equity shares, Gland Celsus Bio Chemicals is planning to sell 1 crore shares. The other two shareholders, Empower Discretionary Trust and Nilay Discretionary Trust, are offloading 35.73 lakh and 18.45 lakh shares, respectively.
GEPL Capital recommends investors to subscribe to the IPO.
“The offer is priced at P/E of ~18.52x on annualized EPS of the quarter ended June 2020. The company has a focus on complex injectables which has high entry barriers and strategic partnerships to penetrate new markets like China which can prove to be a lucrative opportunity for the company,” GEPL Capital said in a note.
“With a strong product pipeline and more complex products under development, focus on B2B expansion and licensing and opportunities to enter more therapy areas, the offer looks attractive,” it added.
BP Equities recommended subscribing to the issue from a medium to long term perspective, citing the niche presence of the company, superior business performance, healthy balance sheet, complex nature of the business and a strong product pipeline.
Choice Broking, on the other hand, advised investors to subscribe with caution, as even though the fundamentals of the business were strong, the valuation appeared stretched.
At the higher price band of Rs 1,500 per share, Gland Pharma’s share is valued at a TTM (trailing 12-month) P/E multiple of 31.7x, which is in-line with pharma industry P/E of 32.3x, Choice Broking said in a note.
Fosun Singapore, which is a subsidiary of Shanghai Fosun Pharma, holds 74 per cent stake in the company. Other investors of the company include Gland Celsus which owns 12.97 per cent while Empower Trust and Nilay Trust own 5.08 per cent and 2.42 per cent stake, respectively.
Last week, the Enforcement Directorate (ED) has directed the company to transfer to it 3.87 per cent stake held by tainted entrepreneur Ramalinga Raju’s family.
The development comes nearly a decade after ED ordered Gland Pharma management to attach 6,00,000 shares held by 10 companies belonging to Raju’s family, in connection with the country’s largest accounting fraud at Satyam Computer Services, which is now merged into Tech Mahindra.
Ahead of the opening of the IPO, Gland Pharma on Saturday said it has raised a total of Rs 1,943.86 crore from 70 anchor investors. The company has raised funds at the upper price band of Rs 1,500 per share by allotting 12,959,089 shares to investors.
Chinese pharmaceutical giant Shanghai Fosun Pharma –controlled Gland Pharma’s IPO is India’s largest pharmaceutical IPO ever. The price band for the offer has been fixed at Rs 1,490-1,500 per share, and the issue will close on November 11.
The IPO comprises a fresh issue aggregating up to Rs 1,250 crore and an offer for sale of up to 3.49 crore shares. While China's Fosun Pharma Industrial Pte is offering to sell 1.9 crore equity shares, Gland Celsus Bio Chemicals is planning to sell 1 crore shares. The other two shareholders, Empower Discretionary Trust and Nilay Discretionary Trust, are offloading 35.73 lakh and 18.45 lakh shares, respectively.
GEPL Capital recommends investors to subscribe to the IPO.
“The offer is priced at P/E of ~18.52x on annualized EPS of the quarter ended June 2020. The company has a focus on complex injectables which has high entry barriers and strategic partnerships to penetrate new markets like China which can prove to be a lucrative opportunity for the company,” GEPL Capital said in a note.
“With a strong product pipeline and more complex products under development, focus on B2B expansion and licensing and opportunities to enter more therapy areas, the offer looks attractive,” it added.
BP Equities recommended subscribing to the issue from a medium to long term perspective, citing the niche presence of the company, superior business performance, healthy balance sheet, complex nature of the business and a strong product pipeline.
Choice Broking, on the other hand, advised investors to subscribe with caution, as even though the fundamentals of the business were strong, the valuation appeared stretched.
At the higher price band of Rs 1,500 per share, Gland Pharma’s share is valued at a TTM (trailing 12-month) P/E multiple of 31.7x, which is in-line with pharma industry P/E of 32.3x, Choice Broking said in a note.
Fosun Singapore, which is a subsidiary of Shanghai Fosun Pharma, holds 74 per cent stake in the company. Other investors of the company include Gland Celsus which owns 12.97 per cent while Empower Trust and Nilay Trust own 5.08 per cent and 2.42 per cent stake, respectively.
Last week, the Enforcement Directorate (ED) has directed the company to transfer to it 3.87 per cent stake held by tainted entrepreneur Ramalinga Raju’s family.
The development comes nearly a decade after ED ordered Gland Pharma management to attach 6,00,000 shares held by 10 companies belonging to Raju’s family, in connection with the country’s largest accounting fraud at Satyam Computer Services, which is now merged into Tech Mahindra.
Ahead of the opening of the IPO, Gland Pharma on Saturday said it has raised a total of Rs 1,943.86 crore from 70 anchor investors. The company has raised funds at the upper price band of Rs 1,500 per share by allotting 12,959,089 shares to investors.
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1 Comment on this Story
 | Binu Pillai4 minutes ago It us all about market manipulations.. An artificial demand is created by the Brokers , that will lead to further 50% upside price on listing.. Where as excellent Pharma companies listed ( like FERMENTA BIOTECH .. ).. nobody want to buy even at CMP 30% lower from its 52-week highs. |