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Sai Life Sciences Limited researches, develops, and manufactures small-molecule new chemical entities. The company offers tailor-made services to biotech firms and global pharma companies. Sai Life Sciences IPO is set to raise Rs 3,042.62 crores. The issue is a combination of fresh issue aggregating to Rs 950.00 crores and offer for sale aggregating to Rs 2,092.62 crores.

About Sai Life Sciences IPO:

• The Company was originally incorporated as ‘Sai Dru Syn Laboratories Ltd’ at Hyderabad, in January 1999.
• Name changed to ‘Sai Life Sciences Ltd’ in December 2003. Thereafter, name changed to ‘Sai Advantium Pharma Ltd’ in August 30, 2006. Subsequently name of the Company was changed to, ‘Sai Life Sciences Ltd’ in May 2012.
• The company is a pure play fully integrated, innovator-focused, contract research, development and manufacturing organization.
• The company provides end-to-end services across the drug discovery, development and manufacturing value chain for small molecule new chemical entities to global pharmaceutical innovators companies and biotechnology firms.
• Sai Life Sciences maintains research laboratories near innovation hubs in Watertown, Massachusetts, USA, and Manchester, UK, complemented by cost-effective labs and manufacturing facilities in India
• The company is one of the largest integrated Indian CRDMOs among listed Indian peers in terms of revenue from operations for FY24, serving as a one-stop platform for discovery, development, and manufacturing.
• The promoters of the company are Kanumuri Ranga Raju, Krishnam Raju Kanumuri, Kanumuri Mytrey, Sai Quest Syn Private Limited, Sunflower Partners, Lily Partners, Marigold Partners and Tulip Partners.

Financials :Sai Life Sciences IPO

Anchor: Sai Life Sciences IPO

Sai Life Sciences on raised Rs 913 crore from anchor investors which included names like INQ Holding LLC, SmallCap World Fund Inc, Fidelity Funds, Abu Dhabi Investment Authority, Goldman Sachs Funds, BlackRock, Nippon India Mutual Fund (MF), HDFC MF, Axis MF and Kotak Mahindra MF. Sai Life Sciences has allotted equity shares to 63 funds.

Salient Points: Sai Life Sciences IPO

• As per F&S report, the India CRDMO market (contract research, development and manufacturing organisation) was among the fastest growing in the APAC during 2018-2023.
• Sai Life Sciences is a innovator-focused contract research, development and manufacturing organization (CRDMO).
• It is generating 97% revenue from international clients.
• Promoters and promoter group hold 41.82% of the pre-offer issued and paid-up equity share capital. Their post-IPO shareholding shall drop to 35.24%.
• As part of OFS, promoter entity, Sai Quest Syn Private Limited and PE investors TPG Asia VII SF Pte Ltd, HBM Private Equity India will offload a part of their stakes. At present, Sai Quest Syn holds a 5.61% stake in the company, TPG owns 39.69%, and HBM Private Equity India 5.5%
• Out of the proceeds from the fresh issue, Rs 720 crore will be used for the repayment/prepayment of all or certain outstanding borrowings, with the remaining allocated for general corporate purposes.
• Contract research accounts for 35% of company’s revenue, whereas development and manufacturing activities are at 65%.
• 60% utilization in H1FY25.
• Peers

• The company’s CDMO pipeline includes over 170 innovator pharmaceutical products. As of September 30, 2024, Sai Life Sciences was involved in the manufacturing of 28 commercial drugs through 38 supplied products. Its extensive operations span regulated markets such as the US, UK, Europe, and Japan.
• Sai Life Sciences is the only entity of scale in India to possess both contract research (“CRO”) and contract development and manufacturing organization (“CDMO”) capabilities.
• The company is the fastest-growing Indian CRDMO among listed Indian peers in terms of revenue CAGR as well as EBITDA CAGR from FY 22 to FY 24.The company’s Revenues from operations grew at a CAGR of ~30%; EBITDA grew faster at a CAGR of 51% between FY2022-2024.
• Post IPO company will be almost debt free and could lead to 50-60 cr. annual saving on interest.
• PE FY24 137.9x.
• Management has indicated broadly 30% growth rate.
• On flip side Post IPO, promoter holding wis low at 35%, and there will be an overhang, as 2 PE investors who hold 27% stake, have invested for around 6 years and they may like to encash by selling their stake in near term.
• Company’s operating margin profile is lowest among its peers.
• High proportion of OFS means not much direct benefit to the company.
• There are favorable industry trends with possible  structural shift in this sector due to supply chain diversification by the US companies which may get a further flip from a possible Biosecure Act.
• I intend to apply in Sai Life Sciences IPO in small to moderate amount though there is good element of risk as it is priced quite steeply. IPO is priced at P/E of 137x which is on higher side compared to peers. What differentiates the company is its offering of both discovery services followed by commercial production under one roof which is mostly for new molecules or those under patent. Overall it is risky but there are some green shoots too.
• GMP as reported in media is 19 (3.5%).
• This post is exploratory and educational purposes only.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared 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. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.