Glenmark Life Sciences IPO Subscription Status: Day 2

Glenmark Life Sciences IPO Subscription Status: Day 2

Glenmark Life Sciences Ltd.’s Rs 1,514-crore initial public offering continued to see strong retail investor interest on the second day of subscription.

The IPO was subscribed more than two times on the first day, led by retail demand. Institutional investors finally began subscribing to the issue on day two.

Glenmark Life Sciences, a unit of Glenmark Pharmaceuticals Ltd., is selling shares at Rs 695-720 apiece. This gives it a market value of Rs 8,822 crore at the upper end of the price band. The offer comprises a fresh issue of Rs 1,060 crore and offer-for-sale worth Rs 453.6 crore by the parent.

The company plans to use Rs 800 crore from the IPO proceeds to pay the parent for the acquisition of the active pharmaceutical ingredient business in 2018. It will use Rs 155 crore for brownfield capital investment at its Dahej facility to enhance the total installed capacity by 200 kiloliter. The rest will be used for additional facilities and general corporate purposes.

Prior to the IPO, the company raised Rs 454 crore by allotting 63 lakh shares to 19 anchor investors.

The IPO will close on July 29.

Glenmark Life Sciences IPO GMP, Subscription Status, Allotment, Listing, Key Details

Glenmark Life Sciences Limited’s Rs 1,514-crore initial public offering (IPO) saw an overwhelming response on the first day of bidding. The much-awaited IPO opened for subscription on July 27. The issue will remain open for investors till July 29. Glenmark Life Sciences IPO was subscribed 2.78 times on Day 1 of bidding. The offer received 4.17 crore equity share bids, which stood against an IPO size of 1.5 crore equity shares. Reservations and subscriptions for day one also saw a significant uptake. The company had a market lot size of 20 shares on the lower end with an accompanying application price of Rs 14,400. On the upper end of the lot, Glenmark Life Sciences IPO carries a size of 260 shares at an application price of Rs 187,200.

Retail investors were allowed to apply for up to 13 lots at the uppermost limit. The qualified institutional buyers (QIBs) had a 50 per cent reservation of which, they put in 10,540 equity shares worth of bids on Day 1 of the IPO. The NII category saw an 85 per cent subscription. Individual retail bidders had a 35 per cent allocation for this IPO and it was subscribed 5.16 times.

Glenmark Life Sciences also gained an anchor booking worth Rs 454 crore on July 26, a day before the opening date of the public issue. The Grey Market Premium for the Glenmark Life Sciences stood at Rs 140 on July 28. This stands against its price band of Rs 695 to Rs 720 per share. This indicates that the shares were trading on the unlisted market at Rs 835 to Rs 860 per share over the initial price band.

The Glenmark Life Science IPO plans to raise around Rs 1,514 crore with its initial public offering, with a fresh issue of Rs 1,060 crore and an Offer for Sale (OFS) of Rs 453.60 from its shareholders. The IPO is set to close on July 29. Following this, the basis of allotment is tentatively taking place on August 3. Initiation of refunds will be on August 4, while the accreditation of shares to the successful bidders’ Demat accounts should likely take place on August 5. The listing date, though yet to be confirmed is likely on August 6.

The object of Glenmark Life Science’s IPO is to use the proceeds of the issue to complete outstanding purchase considerations to the promoter for the spin-off of the API business from the promoter and into the company pursuant to the Business Purchase Agreement, according to the draft red herring (DRH) of the company. Other expenses will include the funding of the capital expenditure requirements as well as other general corporate expenses said the report.

Speaking on the public issue, Vinit Bolinjkar, Head of Research, Ventura Securities said, “The management is looking to raise INR 1,514 cr through a maiden public offering (Rs 1060 crore through fresh issue and INR 454 cr through OFS). Of the issue proceeds Rs 800 crore will go towards repayment of the of outstanding debt (purchase consideration to Glenmark Pharma for spin off of the API business) and Rs 153 crore to fund its capex at Ankleshwar and Dahej facilities and the balance towards other corporate expenses.”

He went on to add, “We expect GLS to grow its revenue at a CAGR of 18.7% to INR 3,155 cr over the period of FY21-24E. EBITDA and net profit over the same period are set to grow at a CAGR of 16.9% to INR 945 cr and 26.2% to INR 707 cr, respectively. EBITDA margins are expected to deteriorate by 141bps (to 29.9%), since the operationalization of the new facilities would lead to an increase in overhead costs. Management aspires to maintain margins at over 30% and is undertaking a number of initiatives like, backward integration into KSM (Key Starter Material) manufacture which will help lower cost of production, optimizing sourcing mix, focus on high margin product categories and localized sourcing in case of imports.”

Glenmark Life Science specialises in the manufacturing of specialized APIs that are specifically used for chronic therapeutic areas like cardiovascular disease (CVS), central nervous system disease (CNS), diabetes, and pain management. Bolinjkar said, “It has a global footprint spanning all the regulated markets (Europe, North America, Japan) and rest of the world. Around 16 out of 20 of the largest generic companies globally are its customers and GLS generates 45-50% of its revenue from exports. Along with parent Glenmark Pharma (35% revenue contribution), these large clients ensure a steady revenue stream.”

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Glenmark Life Sciences IPO subscribed over 2 times so far on Day 2

New Delhi: The Rs 1,514 crore initial public offer (IPO) of Glenmark Life Sciences continued to receive strong response on Wednesday on the second day of bidding for the issue.As of 10:45 am, the issue was subscribed 2.27 per cent with applications for 4,89,48,240 shares out of 1,50,18,279 shares on offer.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 FY-21 adjusted EPS of Rs 28.69 on a 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 an RoE of around 20 per cent,” 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 & 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.