The Rs 1,513.6-crore public offer of Glenmark Life Sciences hasoversubscribed by 5.77 times on July 28, the second day of bidding.
The offer has received bids for 8.66 crore equity shares against IPO size of 1.5 crore equity shares, the subscription data available on the stock exchanges.
Retail investors have put in bids 9.25 times their reserved portion and the portion set aside for non-institutional investors was subscribed 3.39 times. The portion set aside for qualified institutional buyers saw 1.38 times subscription.
The public issue, which comprises a fresh issue of Rs 1,060 crore and an offer for sale of 63 lakh equity shares by promoter Glenmark Pharma opened for subscription on July 27 and will close tomorrow.
Also read - Glenmark Life Sciences IPO opens: Issue size, price, lot size, company financials and other details
The company will not receive any proceeds from the offer for sale. The net proceeds from fresh issue will be utilised for the payment of outstanding purchase consideration to the promoter for the spin-off of their API business into the company (Rs 800 crore), and another Rs 152.8 crore capital expenditure requirements.
Glenmark Life Sciences already raised Rs 454 crore from anchor investors at the higher end of the price band of Rs 695-720 per share.
"At a higher price band of Rs 720, Glenmark Life is demanding a P/E valuation of 25.1x (to its restated FY21 EPS of Rs. 28.7), which is a discount to the peer average of 37.5x. However, based on the forecasted FY24E earnings, the demanded valuation comes out to be 11.4x, which seems to be attractive for a company generating a return on equity of around 20 percent," said Choice Broking.
Also read - Glenmark Life Sciences IPO opens, should you subscribe?
Considering the business growth outlook and almost stable operating margins, the brokerage assigned a 'subscribe' rating for the issue.
Glenmark Life is a leading developer and manufacturer of high value, non-commoditized active pharmaceutical ingredients (APIs). Its portfolio comprises 120 products ranging from therapy areas like cardiovascular, central nervous system disease, diabetes, anti-infectives and others.
The company also provides contract development & manufacturing operations (CDMO) services to a multitude of multinational and specialty pharmaceutical companies. As of FY21, APIs and CDMO contributed around 91 percent and 8 percent to the revenue, respectively.
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