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Supriya Lifescience IPO opens; should you subscribe?

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Supriya Lifescience IPO listing: Supriya Lifescience shares will be available for bidding in a price band of Rs 265-274 apiece in multiples of 54 under the IPO, which ends on December 20. At the upper end of the price band, one lot of Supriya Lifescience shares is valued at Rs 14,796.

Supriya Lifescience IPO opens; should you subscribe?
Supriya Lifescience's initial public offering (IPO) to raise Rs 700 crore opened for subscription on Thursday. The IPO of Supriya Lifescience - a manufacturer and marketer of active pharmaceutical ingredients - is a combination of fresh issuance of shares worth Rs 200 crore, and an offer for sale (OFS) of equity worth Rs 500 crore by promoters and shareholders.
Supriya Lifescience shares are available for bidding in a price band of Rs 265-274 in multiples of 54 under the IPO. At the upper end of the price band, one lot of Supriya Lifescience shares is worth Rs 14,796.
The IPO will close for subscription on December 20. Supriya Lifescience shares are likely to be listed on stock exchanges BSE and NSE on December 28.

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Should you subscribe to the Supriya Lifescience IPO? Here's what brokerages suggest: 
Motilal Oswal Retail Research
The brokerage has a 'subscribe' rating on the Supriya Lifescience IPO. Motilal Oswal Retail Research likes the company given its niche product portfolio in diverse therapeutic segments, its backward integrated business model with advanced manufacturing and R&D capabilities, its extensive global presence with strong clients’ relation, and robust financials.
Supriya Lifescience is well placed to tap the opportunity in the pharma API market given its strong pipeline focused on further diversification, the brokerage said.
"The issue is reasonably valued at 17.8 times FY21 P/E (on a post-issue basis) versus its peers (available at average P/E of 22.8 times), while it enjoys similar growth trajectory," it added.
Angel One
The brokerage has a subscribe rating on the Supriya Lifescience IPO.
Based on the company's FY21 numbers, the IPO is priced at an EV/EBITDA of 11.2 times and a price-to-earnings ratio of 16.2 times at the upper end of the price band, according to Angel One.
"We believe that the company's new manufacturing unit and product launch will be growth drivers for the company in future," Angel One added.
Anand Rathi
The brokerage recommends subscribing to the IPO for the long term.
At the upper end of the price band, Supriya Lifescience is offered
at a P/E of 17.8 times its FY21 earnings with a market capitalisation of Rs 2,205.2 crore, Anand Rathi said.
"The company has significant scale with a leadership position across and niche products. It is backward integrated and has advanced manufacturing,
research and development capabilities. The company has high profit
margins and a strong balance sheet, and reported a RoNW of 46.04 percent in FY21. However, the IPO is fully priced and demanding rich valuations," it added.
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