Glenmark Life Sciences IPO plans to raise Rs 1514 cr which comprises of Rs 454 cr offer for sale and Rs 1060 cr. fresh issue of equity shares. Glenmark Life Sciences is a wholly-owned subsidiary of Glenmark Pharmaceuticals engaged in manufacturer of active pharmaceutical ingredients.

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Glenmark Life Sciences IPO Details:

Issue Period27th  July, 2021 – 29th  July, 2021
Issue DetailsFresh Issue of Equity upto ₹ 1,060 Cr + OFS of 6,300,000 equity Shares
Face Value (₹) 2/-
Issue Size (₹ Cr)₹ 1,498 – 1,514 Cr
Bid Lot20 Shares
Price Band₹ 695 – 720
Issue Structure : 
QIB50% of the offer 
NIB15% of the offer -227.04 Cr
Retail35% of the offer ( 7,357,778 Shares)  529.76 Cr)
Retail Appls for 1x retail3.68 Lacs
GCBRLMsKotak Mahindra Capital, BofA Securities India, Goldman Sachs (India) Securities
BRLMsDAM Capital,, BOB Capital Markets, SBI Capital Markets
RegistrarKFin Technologies Pvt Ltd

Updates & Indicative Time Table:

  • ANCHOR ISSUE: IPO bound Glenmark Life Sciences raised ₹454.32 crore from 19 anchor investors ahead of its IPO. The global investors who participated in the anchor book were HSBC Global, Polar Capital Funds, Oaktree Emerging Market Fund, NT Asian Discovery Master Fund, International Monetary Fund, Copthall Mauritius Investment, The Master Trust Bank of Japan. The domestic investors included names like Jupiter India Fund, Segantii India Mauritius, Kuber India Fund.

About Glenmark Life Sciences

  • Glenmark Life Sciences Limited (“GLS”) was spun off under a business purchase agreement with Glenmark Pharma for its API business. 
  • Glenmark Life Sciences is a leading developer and manufacturer of select high value, non-commoditized APIs (active pharmaceutical ingredients)
    in chronic therapeutic areas, including cardiovascular disease (“CVS”), central nervous system disease (“CNS”), pain management and
    diabetes.
  • GLS operates two business lines – Generic APIs (generics and complex APIs) and CDMO (including specialty).
  • Glenmark Life Sciences has good market share in select specialized APIs such as Telmisartan (anti-hypertensive), Perindopril (anti-hypertensive), Atovaquone (anti-parasitic), , Teneligliptin (diabetes), Zonisamide(CNS) and Adapalene (dermatology).
  • As of March 1, 2021, GLS had a portfolio of 120 molecules globally and sold their APIs in India and exported their APIs to multiple countries in
    Europe, North America, Latin America, Japan and the rest of the world.
  • As of May 31, 2021, GLS had filed 403 Drug Master Files (“DMFs”) and Certificates of suitability
    to the monographs of the European Pharmacopoeia (“CEPs”) acrossvarious major markets.
  • The company currently operates 4 multi-purpose manufacturing facilities located at Ankleshwar and Dahej in the state of Gujarat, and Mohol and Kurkumbh in the Maharashtra withan aggregate annual total installed capacity of 726.6 KL as of March 31, 2021.
Glenmark Life Sciences files for IPO

Glenmark Life Sciences IPO: Financials

Particulars / Rs. In Cr.9mFY21Fy20Fy19FY18
Revenue from Operations49.25140.99101.11100.11
Revenue Growth (%)39.44%1.00%
EBITDA as stated43.3651.3244.8112.28
Profit Before Tax41.8447.5241.1810.53
Net Profit 31.1134.6523.990.03
Equity Share Capital21.7321.7321.737.24
Reserves112.480.9946.236.72
Net worth 134.12102.7267.9343.96
RoNW (%) 23.11%32.58%35.32%0.07%
NAV(₹ )12.169.326.2560.72
EPS (₹ ) 2.863.192.70.61
FV2
IPO Price187
FY20 EPS3.19
PE 58.64
Market Cap2032
Market Cap  /  Sales14.4

Pros

  • Leadership in Select High Value, Non-Commoditized APIs in Chronic Therapeutic Areas;
  • Strong Relationships with Leading Global Generic Companies;
  • Quality-Focused Compliant Manufacturing and R&D Infrastructure;
  • Strong Focus on Sustainability in Operations;
  • Cost Leadership across Products through Careful Monitoring and Continuous Effort;
  • Experienced Management Team with Proven Track Record.

Cons

  • Any manufacturing or quality control problems may subject the company to regulatory action and have an adverse effect on the business, results of operations.
  • For the financial years 2021, 2020 and 2019, revenue from sales to company’s Promoter and Promoter Group accounted for 40.86%, 41.00% and 39.94% of the total revenue from operations, respectively.

Glenmark Life Sciences IPO: Assessment

  • In the year 2019, the API manufacturing business of Glenmark was spun off into Glenmark Life Sciences as part of a broader reorganization plan to focus on the API business.
  • The global API market was estimated at US$181.3 billion in 2020 and expected to grow at a CAGR of 6.2%. The Indian API market has shown 9.1% growth since FY19 and is expected to grow at CAGR of 9.6% in the period 2021-2026.
  • Glenmark Life Sciences (GLS) API portfolio comprises niche and complex molecules, which reflects on their current strengths and the ability to branch into other high value products.
  • As of March 31, 2021, 16 of the 20 largest generic companies globally were customers of GLS. GLS has beee maintaining high customer retention/ loyalty with a high rate of repeat customers. For the financial years 2021, 2020 and 2019, approximately 69% of their customers were repeat customers.
  • GLS has a portfolio of 120 products that have a market size of around $142 billion. These products find use in areas like cardiovascular, central nervous system, diabetes, anti-infective etc.
  • GLS over the years, the company has scaled up its CDMO (contract development and manufacturing operations) which stand at about 8 % of its total revenue in FY21. 
  • GLS was the one that made API for Fabiflu, that saw good sales due to pandemic.
  • GLS has focused on undertaking dedicated R&D in areas which have significant growth potential.
  • GLS intends to increase its API manufacturing capabilities by enhancing the existing production capacities at its Ankleshwar facility during the financial year 2022 and our Dahej facility during the financial years2022 and 2023. It intends to spend 155 crore at Dahej for capacity expansion and also for oncology footprint. It also plans to double capacity over the next 4-5 years, via a 800 KL greenfield plant, funded through internal accruals and debt if needed.
  • The new facility will also provide a platform for the growth of its CDMO business and also add capacity for it’s generics API business.
  • From the money being raised through IPO , ₹800 crore will go to the promoter company Glenmark Pharmaceuticals as payment for the spin-off of this company.
  • For Fiscal 2021, consolidated sales were up by 22.6% to Rs 1885 crore over FY 20. However this will help the company to use is operational profits for expansion.
  • At the upper price band of Rs. 720, P/E works out to be 25.08 on post-issue equity of Rs. 24.5 cr.
  • Glenmark Life Sciences has brought down its dependence on China to single digits.
  • Other listed peers are commanding higher PE as depicted below.
CompanyFVTotal Income Fy21EPSNAVP/ERoNW (%)
Glenmark Life Sciences Ltd21,885.9832.6169.8225.0946.71%
Divis Laboratories Ltd27,031.9674.75350.1263.6521.35%
Laurus Labs Ltd24,835.8618.3648.4136.5937.87%
Shilpa Medicare Ltd1931.2718.13181.3733.379.99%
Aarti Drugs Ltd102,159.3130.0998.0124.2830.70%
Solara Active Pharma Sciences101,645.6569442.1225.8313.93%
  • Glenmark Life Sciences IPO was last reported to be commanding a GMP of Rs. 125.
  • I intend to apply in Glenmark Life Sciences IPO. The Glenmark Life Sciences IPO looks OK but good listing gains at this stage are np\t certain. With a deluge of IPOs on coming weeks, one should tread with caution. However Glenmark Life Science IPO looks reasonable due to healthy margins of about 30%, substantial planned expansion, , favorable tailwinds for API sector including China Plus One business strategy adopted by many firms and promoters with considerable track record.
  • With many IPOs any downturn in market can easily wipe out expected listing gains or bring them to moderate levels.
  • It is bit intriguing to see no mutual fund participation in anchor list of Glenmark Life Sciences IPO.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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