Gland Pharma IPO final day: Issue subscribed 2 times, QIB portion booked over 6 times

The Rs 6,480-crore IPO of Gland Pharma has been subscribed 2.05 times so far on November 11, the final day of bidding for all kind of investors.

The public issue has received bids for 6.2 crore equity shares against IPO size of over 3.02 crore equity shares, the data available on the exchanges showed.

The response from qualified institutional investors has been good on last day of the issue as their reserved portion is subscribed 6.4 times so far, while the portion set aside for retail investors has witnessed 23.6 percent subscription and that of non-institutional investors is at 50.5 percent.

The IPO size mentioned above is excluding anchor book. The company raised Rs 1,944 crore from anchor investors on last Friday, at higher end of price band of Rs 1,490-1,500 per share.

The public issue consists a fresh issue of Rs 1,250 crore and an offer for sale of more than 3.48 crore shares by promoter Fosun Pharma and selling shareholders.

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"Company is bringing the issue at P/E multiple of approximately 30x at higher end of price band of Rs 1,490-1,500 per share on FY20 PAT basis. Company has extensive and vertically integrated injectables manufacturing capabilities with a consistent regulatory compliance track record. Also company has track record of growth and profitability from a diversified revenue base with healthy cash flows. Hence fundamentals of company looks strong," said Astha Jain, Senior Research Analyst at Hem Securities which recommended investor with risk apetite can subscribe issue for short term while investors with long term horizon can subscribe the issue for long term purpose.

Gland Pharma is one of the fastest growing generic injectables-focused companies by revenue in the United States from 2014 to 2019. Company sell its products primarily under a business to business (B2B) model in over 60 countries as of June 2020 including the United States, Europe, Canada, Australia, India and the Rest of the world.

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Company has a consistent compliance track record with a range of regulatory regimes across these markets. It also has a professional management team and one of its promoters, Shanghai Fosun Pharma, is a global pharmaceutical major.

As of June 2020, company along with its partners had 267 ANDA filings in the United States, of which 215 were approved and 52 were pending approval. The 267 ANDA filings comprise 191 ANDA filings for sterile injectables, 50 for oncology and 26 for ophthalmics related products.

Its total revenue from operations has grown at a CAGR of 27.38 percent, EBITDA 36.90 percent and restated profit 55.15 percent from FY18 to FY20.

"Company does not have any listed peers. In fact, the business deals in injectables which has high entry barriers- bodes well for GPL. On the financial front too, it is sitting with good cash levels with negligible debt levels, a good CAGR growth rate in terms of Revenue & PAT and enjoys sound margins," said Manali Bhatia of Rudra Shares who recommended to subscribe the issue for long term given the positive outlook on pharma sector.

Gland Pharma has seven manufacturing facilities in India, comprising four finished formulations facilities with a total of 22 production lines and three API facilities. Further, it has approximately 75.5 crore units per annum of manufacturing capacity for finished formulations.

Company sources more than 30 percent of raw material from China, also its promoters are largely Chinese owned companies, which could be risk amid rising Indo-China border tensions, Manali Bhatia feels.

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