Glenmark Life Sciences shares make a tepid debut

Glenmark Life Sciences shares make a tepid debut

Glenmark Life shares today edged higher on debut on the Indian stock markets, rising to ₹751per share, a premium over issue price of ₹720 apiece. The stock touched a high and a low of ₹800 and ₹737, respectively.

The initial public offer (IPO) of Glenmark Life Sciences was subscribed 44.17 times on the closing day of subscription. Its price range was at ₹695-720 per share. Its IPO size consist of a fresh issue of ₹1,060 crore and offer for sale (OFS) of up to 63 lakh shares by its promoter Glenmark Pharma.

Glenmark Life Sciences, a subsidiary of Glenmark Pharmaceuticals, is a leading developer and manufacturer of select high-value, non-commoditised active pharmaceutical ingredients (APIs) in chronic therapeutic areas, including cardiovascular disease, central nervous system disease, pain management, and diabetes. The company also manufactures and sells APIs for gastro-intestinal disorders, anti-infectives, and other therapeutic areas.

Many brokerages had assigned a subscribe rating to the issue considering the business growth outlook and almost stable operating margins. ‘‘GLS has a good performance execution and clean regulatory track record. The company is also a leading developer and manufacturer of select high value, non-commoditised APIs in chronic therapies and works with 16 of the 20 largest generic companies globally. The growth momentum also has a strong undercurrent of global API industry growth,’’ ICICI Direct had said in a note.

‘‘The company has a ROCE of 46.7% which is better than its peers like Divis labs, at an upper price band of ₹720 company is priced at PE of 22.38 which is better than all the API manufacturing companies. Overall company’s valuations are very attractive..,’’ Yash Gupta, Equity Research Associate, Angel Broking had said.

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Glenmark Life Sciences spikes 11% in early trade on listing day; what should investors do now?

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Glenmark Life Sciences missed listing expectations of opening 10-15 percent above the issue price on its first day of trading on August 6, but later managed an 11 percent in the first 15 minutes before retreating again.\

Most analysts advised booking profits for those who subscribed for listing gains, but they said the stock can also be held for long term considering the strong fundamentals.

The stock opened at Rs 751.10, 4.3 percent over the issue price of Rs 720 per share, rallied up to Rs 799.95 intraday but came down to Rs 750 levels.

At the time of publishing this copy, it was trading at Rs 755.55, up 4.94 percent on the BSE. Combined traded volume of Glenmark Life on the bourses (BSE and NSE) was 1.77 crore equity shares.

“We are recommending to book profit to those who have applied only for listing gain perspective at 10-15 percent premium while those who can hold for long term can keep partial holding and book remaining profit as the company having leadership in select high value, non-commoditized APIs in chronic therapeutic areas enjoys strong relationships with leading global generic companies,” Astha Jain, Senior Research Analyst at Hem Securities told Moneycontrol.

Also, “company’s quality-focused compliant manufacturing and R&D infrastructure, strong focus on sustainability in operations along with cost leadership across products is demonstrating strong fundamentals of the company,” she said.

Prashanth Tapse, VP Research at Mehta Equities also recommended allotted investors to book profits on listing day and said if non-allotted investors wish to buy on a listing day, it is better to wait and watch to accumulate at a better pricing range.

Glenmark Life Sciences raised Rs 1,513.60 crore through its public issue that was subscribed 44.17 times during July 27-29, 2021.

The company develops, manufactures, and supplies high-quality active pharmaceutical ingredients (APIs) in chronic therapeutic areas, including cardiovascular disease (CVS), central nervous system disease (CNS), pain management, diabetes, gastro-intestinal disorders, anti-infectives and other therapeutic areas.

It also operates in contract development and manufacturing operations (CDMO) to offer services to a range of multinational and specialty pharmaceutical companies. It has a portfolio of 120 molecules globally and sold APIs in India and exported to multiple countries in Europe, North America, Latin America, Japan and the rest of the world (ROW).

Prashanth Tapse of Mehta Equities is optimistic about this company considering its niche and specialized products portfolio, parent group’s credentials, strong relationships with global generic companies, expected growth in CDMO business and knowledge in regulatory environment & approvals in the markets.

“With government’s intervention and hope to revive the Indian API industry and make a significant contribution to the achievement of Atmanirbhar Bharat, wherein Glenmark Life is well placed to tap the demand going forward,” Tapse said.

Akhilesh Jat, Pharma Analyst at CapitalVia Global Research also feels the fundamentals of Glenmark Life is quite strong and it can give good returns in the long term.

“Glenmark Life Sciences raised Rs 1,513.6 crore through public issue which will help Glenmark Pharma in value unlocking for the API business where the demand outlook remains robust. However, many unknowns remain for the API business given the recent strong performance was driven by Covid-19-led higher demand and customer stocking to a large extent,” he said.

Glenmark Life currently operates 4 multi-purpose manufacturing facilities which are situated on leasehold properties located at Ankleshwar & Dahej in Gujarat, and Mohol & Kurkumbh in Maharashtra, with an aggregate annual total installed capacity of 726.6 KL as of March 31, 2021.

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Glenmark Life Sciences listing: No bumper gains; shares debut at 4% premium to IPO price

Glenmark Life Sciences shares listed at a weak premium today. (Image: REUTERS)

Glenmark Life Sciences shares made a weak listing on the stock exchanges today, marred by the muted market momentum. Glenmark Life Sciences’ shares began trading at Rs 751 per share, up 4.32% from the IPO price of Rs 720 per share. The IPO of Glenmark Life Sciences had received a strong response from investors earlier last week. A subsidiary of the already listed Glenmark Pharmaceuticals, Glenmark Life Sciences develops and manufactures high value, non-commoditized APIs with a portfolio of 120 products. On listing the company was commanding a market capitalization of Rs 9,203 crore.

Check live price: Glenmark Life Sciences

After the initial few minutes of trade, Glenmark Life Sciences share price extending its opening gains to jump 9% from the IPO price to trade at Rs 783.75 per share.

Glenmark Life Sciences IPO was subscribed 44.17 times by investors. Retail investors had bid for 14.63 times their portion while Non-Institutional Investors (NII) had bid for a whopping 122.54 times their quota. Qualified Institutional Buyers (QIB) subscriptions stood at 36.97 times. QIBs had half of the issue reserved for them while 35% was kept for retail investors and 15% for NIIs. Glenmark Life Sciences’ IPO was a mix of a fresh issue of equity shares and an offer for sale (OFS).

“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 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. The brokerage firm had a ‘Subscribe’ rating to the IPO.

Analysts at Hem Securities had recommended investors to subscribe to the IPO for both listing as well as long-term gains. “Company is bringing the issue at price band of Rs 695-720 per share at p/e multiple of 25 on post issue FY21 eps. The company having leadership in select high value, non-commoditized APIs in chronic therapeutic areas enjoys strong relationships with leading global generic companies,” Hem Securities said in a note.