5 Reasons to invest in Glenmark Life Sciences IPO

5 Reasons to invest in Glenmark Life Sciences IPO

Last Updated: Dec 11, 2022 - 03:21 pm 58.7k Views
Listen icon

As the Glenmark Life Sciences gets set to open on 27 July, let us look at whether there are some really strong arguments in favour of the IPO. But, first a quick stack of the IPO details. Glenmark Life Science IPO will open for subscription on 27 July and close on 29 July. The company is offering around 2.1 crore shares in all in the price band of Rs.695-720 to raise Rs.1,514 crore through a mix of fresh offer and OFS. At upper price band, the market cap is Rs.8,820 crore.

5 reasons to invest in Glenmark Life Sciences IPO

Obviously, any IPO investment must be done in consultation with your financial advisor after ensuring the investment is in sync with your goals. However, here are 5 compelling reasons you may find the IPO an attractive proposition.

  1. Glenmark Life Sciences is the Active Pharma Ingredients (API) arm of Glenmark Pharma and has been accounting for about 30-35% of its overall value. Glenmark Pharma has been a listed stock for over 20 years and has a reputation for delivering solid long term returns. The Glenmark Life Sciences IPO provides an opportunity to participate in the high-growth API segment, which is expected to grow at 8.5% CAGR over next 5 years.

  2. APIs are inputs that go into making medicines. Glenmark Life Sciences derives 90% of its revenues from APIs and 10% from CDMO. Within APIs, Glenmark Life is present in the mid-margin generic API segment and the higher margin complex API segment. Most of the APIs manufactured by Glenmark Life are non-commoditized and cater to specialized areas like cardio vascular, central nervous system, diabetes, pain management etc.

  3. Glenmark Life has a blue chip global clientele. As of 2020, 16 out of the 20 largest generic manufacturers in the world are customers of Glenmark Life. Nearly 70% of the global customers of Glenmark Life are repeat customers indicating high loyalty coefficient. Its client list include Teva Pharmaceuticals, Torrent Pharma, Aurobindo Pharma, KRKA and a host of other generic leaders across the world.

  4. Glenmark has consistently delivered on numbers and its top line and bottom line speak for themselves. Revenue from operations has more than doubled in the last 2 years to Rs.1,886 crore in FY21. EBITDA margins in the last 2 years have grown from 28% to 31.40% putting it in top league of API margins. Net profits are up 80% over last 2 years and the ROCE has increased from 18.21% in FY19 to 32.69% in FY21.

  5. Let us finally look at valuation benchmarks. In the API peer group, Glenmark Life has RONW of 46.7%, while the others in the peer group like Laurus and Aarti Drugs are in the range of 30-35%. In terms of P/E ratios, Glenmark is priced at 22.3x FY21 EPS at the upper end of the price band of Rs.720. This compares very favourably with the median API sector PE ratio of around 33-34X. That leaves enough room for listing upsides.


  6.  

Read: What is Pharma API

The Glenmark IPO brings a good story on the product, client franchise and on valuations. That surely makes it an attractive proposition.

How do you rate this blog?

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage

oda_gif_reasons_colorful

About the Author

Enjoy 0%* Brokerage with 5paisa
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest Blogs
Stock in Action - CAMS

CAMS Stock movement of Day

Weekly Market Outlook for 15th April to 19th April

The benchmark indices started on a weak note and continued downward during Friday's session, influenced by weak global cues. Both the Nifty50 and BankNifty experienced a sharp decline of almost 1% each after reaching their all-time highs on Wednesday. 

Why Should You Not Break Your Fixed Deposit?

Fixed deposits are the safest option to save money. The premature withdrawal of a fixed deposit means an early debit of your investment or savings before the maturity period. There are certain reasons why to not break FD before maturity as they lead to calamities like penalties, taxes, and lower rates of interest depending upon the conditions laid by the bank.