Gland Pharma IPO: Should you subscribe?

Gland Pharma IPO - Dates, Price band, Lot size, recommendations etc.

Gland Pharma IPO – Listing Update

Gland Pharma lists at 1,740 a premium of 14% over the cutoff price of 1,500. Though the response from retail and NII investors was tepid, oversubscription in QIB category guaranteed listing gains for investors.

Gland Pharma raised a total of Rs. 6,480 crores from this issue, which consisted of a fresh issue of 1,250 crores and an offer for sale of Rs 5,230 crores by the promoter and selling shareholders

Company Info

Gland Pharma IPO

Gland Pharma, founded by Mr. PVN Raju in 1978, manufactures and markets small volume liquid parenteral solutions(SVPs).  It emerged as a global player and currently markets its products around 65 countries across 5 continents. Their injectable range includes –  sterile injectables, oncology and ophthalmic, complex injectables, NCE-1s, First-to-file products and 505(b)(2) filings. Their delivery systems include liquid vials, lyophilized vials, pre-filled syringes, ampoules, bags and drops.

The company has a manufacturing capacity of 755 million units per year spanned across 7 facilities in India:

  • Four with 22 production lines for finished formulations and
  • Three for Active Pharmaceutical Ingredient (API) manufacturing

Research and Development:

Company has two R&D facilities in Hyderabad, supported by around 250 scientists focused on Synthetic, Formulation and Analytical R&D.
Areas of Research: Formulation Development, Analytical Method Development, API Process Development and Stability Studies. 
Expertise: synthesis of complex drug molecules –  LMWH, Corticosteroids, Peptides and Cytotoxic

Competitive Strengths

  • Extensive and vertically integrated injectables manufacturing capabilities with a consistent regulatory compliance track
  • Diversified B2B-led model across markets, complemented by a targeted B2C model in India
  • Extensive portfolio of complex products supported by internal R&D and regulatory capabilities.
  • Track record of growth and profitability from a diversified revenue base with healthy cash flows
  • Experienced management and qualified team and are promoted by Shanghai Fosun Pharma

Competitive Strategy

  1. Expand product portfolio and delivery systems to drive revenue growthy.
  2. Continue to invest in manufacturing and related technological capabilities to meet future demand.
  3. Increase current market presence and enter new markets.
  4. Align with Shanghai Fosun Pharma to increase market share.
  5. Pursue strategic acquisitions and partnerships.
  6. Continued focus on cost management.

Financials:

Company201820192020
Revenue from Ops1,622.89 Cr2044.20 Cr2533.24 Cr
EBIDTA584.07 Cr792.07 Cr1094.64 Cr
Restated Profits321.05 Cr451.86 Cr772.86 Cr

Total revenue from operations has grown at a CAGR of 27.38% , EBITDA has grown at a CAGR of 36.90% and restated profit for the year has grown at a CAGR of 55.15% for the fiscals 2018 to 2020

Proceeds from the IPO will be used to:

  • Fund incremental working capital requirements of the company;
  • Fund capital expenditure requirements of the company; and
  • Fund general corporate purposes

Gland Pharma IPO: Dashboard

Issue Details

ItemValue
Issue Size₹6479.55 Cr.
Face Value₹1/- per Equity Share
IPO Price₹1,490 – ₹1,500
Lot Size10
Minimum Lots1
Maximum Lots13

Lot Size and Price

LotsSharesAmount
110₹15,000
13130₹1,95,000

Key Dates

ItemValue
Bid Open09/11
Bid Close11/11
Allotment Finalization17/11
Initiation of Refunds18/11
Credit of Shares19/11
Listing Date20/11

Promoter Holding

HoldingPercentage
Pre-Issue74.00%
Post – issue58.36%
Gland Pharma IPO: Investor Quota and Shares Offered
Investor TypeQuotaShares on Offer
QIBs50%2,15,98,484 (86,39,394*)
Non-Institutional (NII)15%64,79,546
Retail (RII)35%1,51,18,939
Total100%4,31,96,968
*Shares left for subscription after anchor investor sale of 1944 Cr.
Gland Pharma IPO: Day-Wise Subscription Status
Day (Time)QIBNIIRIITotal Subscription
Day 1(5:00 PM)0.000x0.010x0.077x0.040x
Day 2(5:00 PM)0.479x0.026x0.143x0.213x
Day 3(5:00 PM)6.400x0.505x0.236x2.052x
Issue fully subscribed, QIB portion over subscribed

Brokerage Recommendations

Choice Brokerage – Subscribe with Caution

The brokerage feels that the demanded valuations are stretched. “At the higher price band of Rs 1,500 per share, Gland Pharma’s share is valued at a TTM P/E multiple of 31.7x, which is in-line with pharma industry P/E of 32.3x,” said brokerage and research firm Choice Broking in a note while advising investor to subscribe to the Gland Pharma IPO but with caution.

Geojit : Subscribe

“With a solid business model, no listed peers and a positive outlook for the pharma sector, we assign a Subscribe rating for the issue,” said Geojit Financial Services. Geojit feels that Gland Pharma has a strong record of launches with 51 products alone launched in FY20 and 18 in the June quarter of FY21. At the upper price band of Rs 1,500, the stock is available at a PE of 20 times on an annualised basis, which the brokerage finds attractive.

GEPL Capital – Subscribe

“The offer is Priced at P/E of ~18.52x on annualized EPS of the quarter ended June 2020. Gland Pharma is one of the biggest pharma IPOs. 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,” said the brokerage while recommending to subscribe the Gland Pharma IPO.

Latest Company News

Risks

  • The industry is heavily regulated and the company’s business activities require various approvals, licenses, registrations and permissions..
  • Success is dependent on the company’s business arrangements with marketing partners and customers for the sale of the company’s products
  • If the company’s API production is interrupted or company fail to produce or procure high-quality API in the quantities required in a cost-effective manner, sale products could be delayed or interrupted.
  • Any manufacturing or quality control problems may disrupt business operations, damage reputation for high-quality production and expose us to potential litigation or other liabilities
  • Business is dependent on the sale of products to key customers and in key markets, particularly the United States, Europe, Canada and Australia.
  • A significant portion of the income is dependent on sales of key injectable formulations. If the sales volume or pricing of such products declines in the future, or if they can no longer sell any of the key compounds for any reason, the business, financial condition, cash flows and results of operations could be materially adversely affected.
  • The COVID-19 pandemic, or any future pandemic or widespread public health emergency, could materially and adversely impact the business, financial condition, cash flows and results of operations.
  • Exposure to multiple geographies subjects it to risks that could materially adversely affect our business, cashflows, results of operations and prospects.

For complete internal and external risk factors, you can refer the DRHP of the company.

Gland Pharma IPO: Registrar and Lead Managers

Registrar of the Issue

Linktime India Private Limited
C 101, 247 Park, L.B.S.Marg, Vikhroli (West), Mumbai, Maharashtra 400078
Phone: 022 49186270
Email: [email protected]

Lead Managers of the Issue

  • Kotak Mahindra Capital Company Limited
  • Citigroup Markets India Private Limited
  • Haitong Securities India Private Limited and
  • Nomura Financial Advisory and Securities

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