Supriya Lifescience IPO: The Rs 700 crore IPO of API maker Supriya Lifescience has opened today and it has been oversubscribed on the very first day.
Supriya Lifescience IPO: The Rs 700 crore IPO of Supriya Lifesciences, a leading company that makes API (Active Pharmaceutical Ingredients), has opened today (December 16). An API is a biologically active component of a medicine (tablet, capsule, cream, injectable) that exerts an effective effect. Supriya Lifesciences IPO will be open for subscription till 20th December. To invest in this IPO, retail investors will have to invest at least Rs 14796. The money raised through the issue will be used by the company to pay off debt and meet its capital requirements. Talking about the gray market, its prices are at a premium of about 204 percent to the upper price of the price band of Rs 265-274. Market experts have advised to subscribe to this issue.
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This is the opinion of experts regarding investment in the issue
- According to Abhay Doshi, founder of Unlisted.com, a website dealing in pre-IPO and unlisted shares, the shares of Supriya Life Science are at a premium of Rs 285 over the IPO price in the gray market, which means that its demand is strong. According to Doshi, the valuation of this IPO is cheap. Apart from this, the company’s business position is looking strong due to the growth prospects of API industry and China + 1 strategy. China + 1 strategy means that companies are now focusing on other countries instead of relying only on China to make their products and India is likely to get the benefit of this. Regarding Supriya Lifescience IPO, Doshi believes that given the demand for shares in the gray market and given the company’s good growth prospects, the issue can get better subscription.
- According to brokerage firm Reliance Securities, according to the estimated financial data for FY 2022, the IPO is at 11.8x EV/EBITDA, 7.9x EV/Sales and 16.7x P/E price, which is close to the industry average. However, the company’s high EBITDA margin and healthy return ratio (twice the industry average) indicate its premium valuation. The company is focusing on business expansion and has 38 APIs in its product portfolio. Apart from this, the company is also strengthening its R&D capability. Due to all this, the analyst of Reliance Securities has given it a subscribe rating and has expressed the possibility of great listing gains.
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Supriya Lifescience IPO Key Details
- The Rs 700-crore IPO of API maker Supriya Lifesciences will be open on December 16 and investors will get a chance to invest in it till December 20.
- Under the IPO, new shares worth Rs 200 crore will be issued while promoter Satish Waman Bagh will sell shares worth Rs 500 crore under the Offer for Sale (OFS). At present, the promoter’s stake in the company is 99.26 percent while the promoter group holds 0.72 percent in it.
- The price band for the issue has been fixed at Rs 265-274 per equity share.
- The lot size is of 54 shares i.e. according to the upper price of the price band, investors will have to invest at least Rs 14796.
- The face value of the shares is Rs 2.
- 75 per cent of the issue is reserved for Qualified Institutional Buyers (QIBs), 15 per cent for non-institutional investors and 10 per cent for retail investors.
- ICICI Securities and Axis Capital are the book running lead managers of the issue.
- The allotment of shares can be finalized on December 23, while the day for listing has been fixed for December 28.
- The money raised through the new shares will be used to meet capital expenditure requirements, pay off debt and for general corporate purposes.
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Company related details
- The main focus of Supriya Lifesciences, a company that manufactures and supplies APIs, is on Research and Development (R&D). According to the data available till 31 October 2021, the company manufactures 38 APIs.
- From 1 April 2021 to 31 October 2021, the company’s products were exported to 1296 customers including 346 distributors in 86 countries. The company’s API business is spread across Europe, Latin America, Asia and North America.
- Talking about the financials of the company, the net profit (Profit After Tax) of the company has increased continuously. The company had a net profit of Rs 39.42 crore in the financial year 2019, which increased to Rs 73.37 crore in the next year. Talking about the last financial year, the company had a net profit of Rs 123.83 crore. In the first half of the current financial year, April-September 2021, the company made a net profit of Rs 65.96 crore.
(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.)
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