Gland Pharma, one of the largest and fastest-growing injectable-focused B2B companies, is set to debut on bourses today, November 20, after closing its public issue with 2.06 times subscription last week.
The company, after consultation with book running lead managers, has fixed the final issue price at Rs 1,500 per share.
All experts expect Gland Pharma to show a decent performance on debut due to its strong earnings trajectory, even though the issue received a tepid response from investors.
Qualified institutional investors helped the issue get fully subscribed as their reserved portion was subscribed 6.4 times, while the portion set aside for non-institutional investors witnessed a subscription of 51 percent and that of retail 24 percent.
The stock was trading at a premium of Rs 110 in the grey market, as per the data available on IPO Central.
"Gland Pharma is expected to list at 10 percent or above premium to issue price. Company has extensive and vertically integrated injectables manufacturing capabilities with a consistent regulatory compliance track record," Astha Jain, Senior Research Analyst at Hem Securities told Moneycontrol.
"Also the company has a track record of growth and profitability from a diversified revenue base with healthy cash flows. Hence fundamentals of the company look strong," she said.
Prashanth Tapse, AVP Research at Mehta Equities also feels considering pharma space in action a decent listing can be expected in the range of Rs 1,575-1,620 levels.
Gland Pharma premium rises significantly in grey market ahead of listing
Gland Pharma, backed by Chinese company Fosun Pharma, registered a profit growth at a 55.2 percent CAGR and revenue at 27.4 percent CAGR, while EBITDA grew at a 33.6 percent CAGR during FY18-FY20. Over the year, its margin improved, at around 39 percent in FY20 & 48 percent during the June quarter.
It is a niche player in sterile injectables, oncology and ophthalmic solutions with focus on first-to-file, 505(b)(2) filings and NCE- 1s. Along with its partners Gland has 267 ANDA filings (101 owned) in the US as of Q1FY21, of which 215 were approved.
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"Despite strong equity market scenario and consistent FII inflow, Gland Pharma IPO couldn't attract investor's interest when compared to some other recent IPOs. Uncertainty and lack of confidence from investors as a fact that 74 percent of Gland Pharma is owned by Chinese drug firm Fosun Pharma hurt local investors demand. As far as valuations are concerned even which is bit stretched when compared to large MNC pharma players in India and surprisingly we have seen huge rallies in pharma stocks in the past year which now trends low interest in new pharma entries," Tapse said.
So far the Pharma index surged 80 percent from its March 23's low point given the huge demand for the sector due to COVID-19 crisis.
Gland Pharma had opened its Rs 6,480 crore public issue for subscription during November 9-11, with a price band of Rs 1,490-1,500 per share.
"We expect listing gains to be very limited for Gland Pharma as IPO is already priced at 30.1x at the upper end of the price band. As retail subscribed only 0.24x of retail portion, less participation from retail investors may be due to higher valuation of IPO as well as Anti-Chinese sentiments," Yash Gupta-Equity Research Associate at Angel Broking said.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.