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Supriya Lifescience lists with 55% premium, should investors hold or book profit?

Supriya Lifescience IPO | The stock opened at Rs 425 on the BSE against the issue price of Rs 274, while the opening price on the National Stock Exchange was Rs 421

December 28, 2021 / 12:54 PM IST
Supriya Lifescience IPO

Supriya Lifescience IPO

Active pharmaceutical ingredients supplier Supriya Lifescience saw a stellar debut on December 28 and listed at a premium of 55 percent on the stock exchanges.

The stock opened at Rs 425 on the BSE against the issue price of Rs 274, while the opening price on the National Stock Exchange was Rs 421.

The initial public offering of the active pharmaceutical ingredients manufacturer garnered huge demand from investors as the offer was subscribed 71.51 times during December 16-20.

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Brokerages like Motilal Oswal and Angel One had a “subscribe” rating to the issue.


At 11 am, the stock was up 48 percent on the BSE at Rs 406.

Should investors hold on or book profit? Here’s what analysts have to say:

Yash Gupta, Equity Research Analyst, Angel One

We had given a "subscribe" rating to Supriya Lifescience's IPO. We suggest short-term investors to book profit at Rs 407, and long-term investors can hold. Now, Supriya Lifescience is trading at price to earnings of 22.6 times and EV/EBITDA of 7.6 times based on H1FY22 numbers, which is attractive as compared to peers, especially due to its better returns ratios. We recommend short-term investors to book profit, while others can look for Rs 375-390 levels to add for the long term.

Sneha Poddar, AVP Retail Research, Motilal Oswal Financial Services

Supriya Lifescience, a pharma API manufacturer, made a stellar debut with 55 percent gains, listing at Rs 425 a share against IPO price of Rs 274, amid positive market sentiment.

It has a niche product portfolio of 38 APIs with focus primarily on diverse therapeutic areas. It has consistently been India’s largest exporter of certain niche products with well-balanced presence between regulated and semi/non-regulated markets.

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We like Supriya for its niche product portfolio, backward integrated business model and robust financials. It is well-placed to tap into opportunities in the pharma API market given its strong pipeline focused on further diversification.

Akhilesh Jat, Senior Research Analyst, CapitalVia Global Research

The listing gains are in line with investors’ expectations backed by strong fundamentals, reasonable valuation and recovery in Indian markets this week. Investors who have solely subscribed the issue for listing gains can consider booking profits at current levels. However, we recommend holding the stock for medium to long term as the firm plans to utilize the proceeds towards capex requirements, debt repayment and general corporate purposes.

With the API and specialty chemicals segments expected to grow over the next three to five years, investors can look to buy around Rs 370-380 as the issue is fairly priced.

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Rajnath Yadav, Research Analyst, Choice Broking.

Supriya Lifescience's issue was attractively priced, and thus we had assigned a “subscribe” rating. However, the prevailing share price is well above our target price, thus we advise investors to book profit.

Santosh Meena, Head of Research, Swastika Investmart

In the past three-five years, the API and specialty chemical industry has been a darling of investors and we believe that this trend will continue for several years.

As a result of the decent participation from investors, the IPO debuted at Rs 421 versus the issue price of Rs 274, a premium of 53 percent.

In the long run, investors should hold the stock, while those who applied for listing gains can keep a stop loss of Rs 380 on a closing basis. New investors can also look for buying opportunities in dips.

Read all the IPO-related news here

Divam Sharma, Co-founder, Green Portfolio

Supriya Lifescience is one of the leading manufacturers and suppliers of APIs with a niche product basket of 38 APIs across therapeutic segments.

It also has a strong financial track record as its revenue/Ebitda/PAT grew at a CAGR of 18 percent/61 percent/77 percent over FY19-21.

We like companies that have a leadership position in niche areas, and hence advise investors to hold Supriya Life over the long term. For those looking to invest, we advise them to wait for the right entry valuation (preferably less than 20x TTM PE).

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Sonam Srivastava, Founder, Wright Research

Supriya Lifescience is an attractive stock in the pharma sector being an export-oriented manufacturer of APIs. Its revenue and profitability have been growing well over the last few years, which makes it extremely attractive in an IPO market that loves profitable companies. We would recommend investors to hold.

Swapnil Shah, Head of Research, BP Wealth

The promoter’s technical expertise in the sector has enabled the company to diversify its product portfolio and gain a strong foothold in the domestic and international markets.

Post listing, it is valued at 24 times P/E (based on FY21 earnings), which we believe is still attractive. Thus, we suggest investors to hold shares of Supriya Lifescience for the long term.

Disclaimer: The views and investment tips expressed by experts on Moneycontro are their own and not those of the website or its management. Moneycontro advises users to check with certified experts before taking any investment decisions.
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first published: Dec 28, 2021 11:41 am
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