The IPO frenzy among investors is at it peak with retail investors leading from the front.
Initial public offerings of two companies are currently open for subscription - Glenmark Life Sciences and Rolex Rings.
Glenmark Life Sciences, the subsidiary of Glenmark Pharma, opened its IPO for subscription on July 27 and today (July 29) is the last day, with a price band of Rs 695-720 per share. The company is planning to raise Rs 1,513.6 crore through its public issue.
Healthy subscription numbers
At 11 am, the public offer of Glenmark Life Sciences was subscribed 6.48 times on the last day. It received bids for 9.73 crore equity shares against IPO size of 1.5 crore equity shares at the time of writing this copy, the subscription data available on the exchanges showed.
Retail investors have put in bids 10.27 times their reserved portion so far and non-institutional investors 4.3 times. The portion set aside for qualified institutional investors has been subscribed 1.4 times.
Also read: Tatva Chintan IPO shares zoom 95% on debut, list at Rs 2,111.80 per share
On the other hand, Automotive components manufacturer Rolex Rings opened its offer on July 28 and will close tomorrow (July 30), comprising a fresh issue of Rs 56 crore and an offer for sale of up to 75 lakh equity shares by Rivendell PE LLC.
At 11 am, Rolex Rings issue was oversubscribed by 5.05 times on the second day of bidding. It received bids for 2.87 crore equity shares against IPO size of 56.85 lakh equity shares, the subscription data available on the exchanges showed.
To Know All IPO Related News, Click Here
The portion reserved for retail investors was subscribed 9.21 times and that of non-institutional investors was at 2.10 times at the time of writing this copy. Qualified institutional buyers put in bids for 4,688 equity shares against their reserved portion of 16.24 lakh equity shares.
Grey market premium
Glenmark Life shares traded at a premium of Rs 150 in the grey market, the IPO Watch and IPO Central data showed. This implies a trading price of Rs 870, higher by 20.8 percent over Rs 720, the higher end of the issue price band.
Meanwhile, Rolex Rings shares traded at a healthy premium of Rs 450-460 in the grey market, the IPO Watch and IPO Central data showed. This implies a trading price of Rs 1,350-1,360, a 50-51 percent premium over issue price of Rs 900, the higher end of the price band.
Analysts tilt towards Glenmark Life
Even though both companies cater to different sectors, analysts seem to be in favour of Glenmark owing to its place in the active pharmaceutical ingredients (API) business.
"Both belong to different sectors. Rolex Rings is a play towards the auto industry whereas Glenmark Life Sciences is a pure-play on pharma along with CDMO. In my view, Glenmark should be subscribed owing to the strong parent capabilities and constant growth over the longer period of time," said Ashish Chaturmohta, Director Research, Sanctum Wealth Management.
Glenmark Life Sciences is a leading developer and manufacturer of select high-value, non-commoditized APIs in chronic therapeutic areas, including cardiovascular disease central nervous system disease, pain management and diabetes.
It also provides contract development and manufacturing operations (CDMO) services to a range of multinational and specialty pharmaceutical companies.
On the other hand, Rolex Rings has the fifth largest forging capacity in India with 60 customers across 17 locations. The company supplies its products to domestic as well as international automotive companies.
"I believe Glenmark Life science IPO might give an edge over Rolex Rings. The company specializes in developing and manufacturing APIs, with a total of 120 different APIs. I think business has strong international ties with big pharma companies and exports globally," said Gaurav Garg, Head of Research at CapitalVia Global Research.
Ajit Mishra, VP - Research, Religare Broking believes Glenmark Life Sciences is well-placed in the API business (as it earns nearly 90 percent of revenue from this segment) with a product portfolio of 120 products.
"The company plans to diversify the customer base by increasing geographic market coverage, grow the CDMO business along with API and improve operating efficiency. On the financial front, its performance has been strong. We have a positive view of the company from the long-term perspective," Mishra said.
Brokerage firm Angel Broking pointed out Glenmark has a ROCE (return on capital employed) of 46.7 percent which is better than its peers like Divi's Labs. At an upper price band of Rs 720, the company is priced at the PE (price-earnings ratio) of 22.38 which is better than all the API manufacturing companies.
"Overall, the company's valuations are very attractive and we expect very good listing gains of around 25- 35 percent. We have a positive outlook on Glenmark Life science IPO," said the brokerage firm.
As for Rolex Rings, the revenues for most listed peers and the company have declined over the past four years but the company has generated better ROEs on account of better asset turnover, Angel Broking pointed out.
The company has a long-standing relationship with existing clients and with newer products, it should be able to increase the market share.
At a price band of Rs 960-970, the company is seeking PE of nearly 42 times without considering the deferred tax credit of Rs 25 crore, which is reasonable given its strong return ratios.
"Nearly 55 percent of revenue comes from outside India and considering potential rebound in demand from user industries, we have a positive outlook on Rolex Rings IPO," Angel Broking said.