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Glenmark Life Sciences IPO opens for subscription; should you invest?

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Analysts are positive on Glenmark Life Sciences' IPO citing reasonable valuations and the company's firm positioning in the API market.

Glenmark Life Sciences IPO opens for subscription; should you invest?
The initial public offering (IPO) of Glenmark Life Sciences, the manufacturer of high-value active pharmaceutical ingredients (APIs), opened for subscription on Tuesday at a price band of Rs 695-720 per share.
The issue, which will close on July 29, comprises fresh issuance of 1.47 crore equity shares (worth around Rs 1,060 crore) and an offer for sale of up to 63 lakh shares by its parent company Glenmark Pharmaceuticals.
Glenmark Life Sciences had on Monday raised Rs 454 crore by allocating 63,06,660 equity shares to 19 anchor investors at Rs 720 apiece ahead of its initial share sale.
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Among the brokerages bullish on the issue are Angel Broking, Anand Rathi, Religare Broking and Geojit Financial Services.
Brokerage firm Anand Rathi has assigned a 'subscribe' rating to the IPO citing the company's leadership in select high-value non-commercialised APIs in chronic therapeutic areas, cost leadership, strong management, strong balance sheet, growing business, high return on net worth of 46.71 percent in FY21 and reasonable valuations.
"At the upper end of the IPO price band, Glenmark Life Sciences Ltd is offered at 25.09 times its FY21 earnings," the brokerage added.
According to brokerage house Religare Broking, Glenmark Life Sciences is well placed in the API business with a product portfolio of 120 products including therapy areas like cardiovascular, CNS, diabetes and anti-infectives.
"Going forward, the company plans to diversify the customer base by increasing geographic market coverage, grow the CDMO business along with API and improve operating efficiency," said Religare, which has a positive view on the company from a long-term perspective.
Vinit Bolinjkar, Head of Research, Ventura Securities, also recommends subscribing to the Glenmark Life IPO for long-term investing.
"Our target price of Rs 1,039 (18x FY24 earnings) represents a potential upside of 44 percent from the offer price of Rs 720 over a period of 18-24 months," he said.
According to Angel Broking, Glenmark Life Sciences has strong relationships with the top global generic pharmaceutical companies worldwide, which ensures revenue visibility.
This company may not have long-term contracts with its clients, but their relationships extend for more than five years, said Angel Broking, which also recommends subscribing to the issue.
Geojit Financial Services believes the IPO is "fairly priced". It has assigned a 'subscribe' rating to the issue.
The company has gradually built scale and reach in API offerings through economies of scale in manufacturing operations and a portfolio build-up, which has enabled it to service new markets and explore new product and service offerings to customers.
"Those looking to take advantage of long-term growth in the sector can invest in the issue with a long-term outlook," said Gaurav Garg, Head of Research at CapitalVia Global Research.
"The company has shown robust growth in its revenue as well as PAT over last three years. The grey market premium of around 20 percent shows that investors can get decent listing gains from the issue," he said.
Glenmark Life Sciences has a good performance execution and clean regulatory track record, said brokerage ICICI Direct, adding that it also has a 'subscribe' rating to the issue.
Hem Securities recommends subscribing to the issue for listing gains as well as for the long term. It is positive on the company's strong clientele, strong focus on sustainability in operations and quality-focused compliant manufacturing and R&D infrastructure.
(Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.)