NEW DELHI: The biggest pharma IPO Gland Pharma attracted 5 per cent bids on Day 2 of the bidding process so far.

By 10.15 pm, the Rs 6,480 crore issue received bids for 13,93,970 shares compared with the issue size of 3,02,37,879 shares. The issue was subscribed 4 per cent on Day 1.

Progressive Share Brokers said the sentiment towards the IPO has dampened a bit due to Chinese investments as well as from the fact that Satyam founders hold a stake in the company.

“This has put the market slightly off with regard to the subscription. The company has no listed peers that engage in the similar business. At an annualised EPS of 49.88 for FY20, the P/E stands at 30.1 times. We have not rated the IPO and investment would be at the discretion of the risk appetite of investors,” the brokerage said.

The IPO is a mix of a fresh issue of Rs 1,250 crore worth shares and an offer for sale of up to 3.49 crore shares.

The Shanghai Fosun Pharma-owned company, which raised a total of Rs 1,943.86 crore from 70 anchor investors last week, is selling stocks in the Rs 1,490-1,500 price range.

On the block are 1.9 crore shares by Fosun Pharma Industrial Pte and 1 crore shares by Gland Celsus Bio Chemicals. Empower Discretionary Trust and Nilay Discretionary Trust are two other shareholders offloading 35.73 lakh and 18.45 lakh shares, respectively.

Choice Broking advised investors to subscribe with caution, as even though the fundamentals of the business were strong, the valuation appeared stretched. At the higher price band of Rs 1,500 per share, Gland Pharma’s share is valued at a trailing 12-month P/E multiple of 31.7 times, which is in-line with pharma industry P/E of 32.3 times, Choice Broking said in a note.

Sharekhan said the offer is priced at 29.8-30 times its FY2020 EPS at lower and upper price bands.

The company, it said, is present in one of the fastest-growing generic injectables space, with an extensive vertical integration and follows a B2B model across markets.

“Gland is expanding its manufacturing footprint, has a strong pipeline of filed ANDAs and is also expanding its geographical presence in new markets. Looking at the strong domain expertise, a sturdy and consistent earnings track record and healthy return ratios, the future looks good,” it said.

Geojit Financial Services noted that the company has a strong record of launches with 51 products alone launched in FY20 and 18 in the June quarter of FY21.

At the upper price band of Rs 1,500, the stock is available at a PE of 20 times on an annualised basis, which the brokerage finds attractive. “With a solid business model, no listed peers and the positive outlook for pharma, we assign a Subscribe rating for the issue,” the brokerage said.





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