The Initial Public Offer of the active pharmaceutical ingredient manufacturer of Glenmark Life Sciences will open on July 27. The initial public offering comprises of a fresh issue of Rs 1,060 crore and an offer for sale of up to 63 lakh equity shares by the promoter Glenmark Pharmaceuticals. This brings us to the most important question- Should you subscribe to this IPO? Let us discuss
About the Company
Glenmark Life Sciences is a spin-off of Glenmark Pharma. It is a leading developer and manufacturer of select high value, non-commoditized active pharmaceutical ingredients (APIs) in chronic therapeutic areas, including cardiovascular disease (CVS), central nervous system disease (CNS), pain management and diabetes, as per Frost & Sullivan report. It also manufactures and sells APIs for gastro-intestinal disorders, anti-infectives and other therapeutic areas.
The company has a strong market share in select specialized APIs such as Telmisartan (anti-hypertensive), Atovaquone (anti-parasitic), Perindopril (antihypertensive), Teneligliptin (diabetes), Zonisamide (CNS) and Adapalene (dermatology). The company also increasingly provides contract development and manufacturing operations (CDMO) services to a range of multinational and speciality pharmaceutical companies.
As of March 31, 2021, 16 of the 20 largest generic companies globally were its customers.
It currently operates four multi-purpose manufacturing facilities at Ankleshwar and Dahej in Gujarat, and Mohol and Kurkumbh in Maharashtra with an aggregate annual total installed capacity of 726.6 KL as of March 31, 2021.
The company intends to increase its API manufacturing capabilities at Ankleshwar facility during FY22, and Dahej facility during FY22 and FY23 by an aggregate annual total installed capacity of 200 KL. This additional production capacity is expected to help the company further expand generic API production and also grow the oncology product pipeline.
Objective of the Issue
Glenmark Life Sciences will use the proceeds for payment of outstanding purchase consideration to the promoter for the spin-off of the API business from the promoter into the company under the Business Purchase Agreement dated October 9, 2018 (Rs 800 crore), for funding capital expenditure requirements (Rs 152.76 crore), and general corporate purposes.
Glenmark Life Sciences IPO Dates
The offer will open for subscription on July 27 and will close on July 29, 2021. Anchor book, if any, will open for bidding for a day on July 26, a day before the issue opens.
Price Band and Fundraising
The price band for the public offer has been fixed at Rs 695 - Rs 720 per equity share. The company is planning to raise Rs 1,497.85 crore at the lower, and Rs 1,513.6 crore at the higher end of the price band.
Lot Size and Reserved Portion Category-wise
The minimum application that can be made by an investor would be for 20 equity shares and in multiples of 20 equity shares thereafter. Retail investors can invest a minimum of Rs 14,400 per lot and the maximum investment would be Rs 1,87,200 (for 13 lots) at the higher end of the price band, as they are allowed to invest up to Rs 2 lakh.
The company in consultation with merchant bankers decided to reserve up to 50 per cent of the offer for qualified institutional buyers, up to 15 per cent for non-institutional bidders, and up to 35 per cent for retail individual bidders.
All potential bidders, other than anchor investors, have to mandatorily utilise the Application Supported by Blocked Amount (ASBA) process.
Allotment, refunds and listing dates
Glenmark Life will finalise the IPO share allotment around August 3, and the funds will be refunded or unblocked from the ASBA account around August 4, 2021. Eligible investors will get their shares in their Demat accounts around August 5, and shares will debut on August 6.
Its equity shares are proposed to be listed on BSE and NSE.
Kotak Mahindra Capital Company, BofA Securities India and Goldman Sachs (India) Securities are the global co-ordinators and book running lead managers to the offer. DAM Capital Advisors, BOB Capital Markets and SBI Capital Markets are the books running lead managers to the offer.
Glenmark Life reported a profit for the financial year FY21 at Rs 351.58 crore on revenue of Rs 1,885.16 crore, against a profit of Rs 313.09 crore on revenue of Rs 1,537.31 crore in FY20. Profit in the financial year FY19 stood at Rs 195.59 crore on revenue of Rs 886.42 crore.
Should You Subscribe?
It is the second public issue in the last two decades from the Glenmark group. It appears that the Company is trying to encash the inclination towards the pharma segment during the pandemic. Given the group’s credentials and the financials of the company showing a positive trend, the cash surplus investors can consider investing with a long term perspective.