Glenmark Life Sciences IPO: Glenmark Life Sciences’ IPO of Rs 1514 crore was open for subscription on Tuesday and so far it has been oversubscribed 5.37 times. Its IPO has come at a time when there is a sell-off in farm stocks. Due to the sell-off, the pharma index has fallen below 14 thousand. In such a situation, the question is arising in the minds of investors whether to subscribe to the IPO of Glenmark Life Sciences or not.
There is also panic in the minds of investors due to the falling price of Glenmark Life Sciences in the gray market. This stock was trading at a premium of Rs 300 to the IPO price in the gray market before the IPO, which is now at a premium of just Rs 136-138. Experts believe that instead of taking the decision of IPO subscription at a gray market premium, it should be taken on the financial condition of the company. Apart from this, analysts believe that selling in pharma stocks is a short term correction.
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Glenmark Life Sciences will increase market share
- According to Abhay Doshi, co-founder of UnlistedArena, investors should not decide on the investment at gray premium but should focus more on the financial condition of the company. According to Doshi, the Indian API (Active Pharma Ingredient) industry has good growth potential due to supported government policies, low production cost base. Apart from this, Indian companies will benefit due to strict control over Chinese API companies.
- According to Doshi, if we talk about the company’s financial position, the valuation of the IPO at an upper price of Rs 772 is 22 times the earnings, which is visible moderately when compared with Pierce. However, its market share will increase due to expansion plans in API and CDMO (Contract Development and Manufacturing Organization) segments.
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This is the expert’s advice on subscription
- Glenmark Life Sciences is a leading manufacturer of specialized APIs and its products are exported to many countries of the world including Europe, Latin America, Japan. It has business relationships with leading generic companies around the world. According to Vishal Wagh, Research Head, Bonanza Portfolio, it manufactures quality products with superior financial performance and R&D infra. In such a situation, according to Wagh, you can earn profits on investing in this stock not only for the long term but also in the short term. According to Wagh, investors can get a listing gain of 15-25 per cent.
- According to ICICI Direct, Glenmark Life Sciences has a better track record. Globally, the API industry has good growth potential, due to which it has been given a subscribed rating by ICICI Direct.
- The company’s focus is on R&D, Expansion, Growth Opportunity in CDMO Services and Expansion of Complex API Portfolio. Due to this, Geojit Financial Services has given it a subscribed rating for the long term.
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lot size of 20 shares
For the IPO of Glenmark Life Sciences, a subsidiary of Glenmark Pharma, investors can place bids in lots of 20 shares. For this, a price of Rs 695-720 per share has been fixed i.e. according to the upper price band, investors will have to invest at least Rs 14400. 50 per cent of the shares worth Rs 756.8 crore have been reserved for Qualified Institutional Buyers (QIBs) and 15 per cent for Rs 227 crore for Non-Institutional Investors (NIIs). 35 per cent of the issue, valued at around Rs 529 crore, is reserved for retail investors. Funds from the newly issued shares will be used for capital expenditure and outstanding purchases.
(The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)
(Article: Kshitij Bhargava and Surbhi Jain)