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5 Reasons to invest in Glenmark Life Sciences IPO

5 Reasons to invest in Glenmark Life Sciences IPO
26/07/2021

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.

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Macleod Pharma plans Big Pharma IPO

27/07/2021

Macleod Pharma is one of the largest non-listed pharma plays in India. Macleod Pharma was floated by Dr. Rajendra Agarwal in 1986 to manufacture anti-tuberculosis drugs in India. The big news is that Macleod Pharma may be considering an IPO shortly, although they are yet to file the DRHP with SEBI. The IPO of Macleod Pharma was already doing rounds after the rip-roaring success of the Gland Pharma IPO last year.

It is being estimated that in terms of size, the Macleod Pharma IPO could be next only to Gland Pharma, which had raised Rs.6,480 crore through its IPO last year. In the last couple of years, pharma IPOs like Laurus Labs, Gland Pharma and Eris Life Sciences have done phenomenally well post listing. COVID-19 and the sudden rush for APIs and specialized generics is leading to a positive re-rating of pharma companies. Clearly, Macleod is planning its IPO to be in the right place at the right time.

Macleod Pharma has a rich 35 year legacy with strong focus on anti-tubercular, Anti-malarial, anti-bacterial, anti-retroviral and anti-diabetic medicines. Currently, Macleod has 14 manufacturing facilities for finished dosage and 2 facilities for manufacturing APIs. Macleod is a vertically integrated pharma company manufacturing close to 25 billion units of finished dosages annually. These include tablets, capsules, liquids, orals, inhalers, dry powders etc.

Macleod reaches out to over 150,000 doctors in India. Some of its popular brands in the market include Omnacortil, Lulimac, Budetrol, Defcort, Geminor, Vildamac, Olmesar, Nexovas, Thyrox, Tenlimac, Enzomac, Macfolate, Meromac, Tazomac, Montemac and Rebagen.

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Rolex Rings IPO – Facts you should know

Rolex Rings IPO
27/07/2021

Rolex Rings IPO opens on 28 July and closes on 30 July. It is a mix of fresh issue and an OFS and is priced in the band of Rs.880-900. Here are some facts to know about the Rolex Rings IPO.

- The issue consists of a fresh issue of Rs.56 crore and an offer for sale of 75 lakh shares. At the upper end of the price band, this works out to Rs.675 crore of OFS taking the total issue size of Rolex Rings IPO to Rs.731 crore.

- Retail investors are allowed to bid in minimum lots of 16 shares and in multiples of 16 shares thereof. They can apply for a maximum of 13 lots which translates into an investment of Rs.187,200. Upper limit for retail quota is Rs.2 lakh per application.

- Rolex Rings is ranked among the top-5 bearing companies in terms of installed capacity. It basically manufactures hot rolled forged and machined bearing rings and automotive components. Rolex Rings basically caters to the needs of two wheelers, passenger vehicles, CVs, EVs, railways and even industrial machinery.

- Rolex Rings has installing forging capacity of 144,750 MTPA plus capacity of 69 million machine parts annually. Its location in Rajkot helps it to easily access the automobile clusters in North India, western belt and even in South India. Rolex also supplies to over 60 global customers spread across 17 countries.

- For FY21, despite COVID stress, Rolex Rings earned net profit of Rs.87 crore on sales of Rs.616 crore implying net margins of 14.12%. Between FY19 and FY21, Rolex Rings reduced debt equity ratio from 1.79X to 0.70X.

- Rolex is likely to debut with a market cap of Rs.2,450 crore and a P/E ratio of 28X, which is competitive in the forging industry.
 

Also Read: Rolex Rings IPO - An Indirect Automobile Play

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SIP Calculation: How to Make Rs. 1 Crore for Retirement

SIP Calculation - How to Make Rs. 1 Crore
by Nikita Bhoota 27/07/2021

A systematic investment plan or SIP is a regular investment in a mutual fund (typically monthly). By investing regularly, there is discipline, there is forced savings and the benefit of rupee cost averaging works in your favour. Above all, these SIPs will help you achieve long term financial goals like retirement, children’s education etc with ease and confidence.

Today it is very simple to work out how much you need to save each month to reach your target corpus. Talk about a popular target of Rs.1 crore corpus on retirement. You will be surprised at how little you need to save if you start early enough. Check this table.

SIP Calculation Table:

Target

CAGR Yield

Period

Instrument

SIP - Nominal

SIP - Real

Rs.1 crore

14%

10 Years

Equity Fund

Rs.38,160

Rs.54,500

Rs.1 crore

14%

15 Years

Equity Fund

Rs.16,320

Rs.28,800

Rs.1 crore

14%

20 Years

Equity Fund

Rs.7,600

Rs.16,900

Rs.1 crore

14%

25 Years

Equity Fund

Rs.3,675

Rs.10,500

This is very simple if you use a SIP calculator or a systematic investment plan calculator. Most mutual funds offer this mutual fund calculator to help you evaluate how much SIPs can earn.

SIP Calculation:

Focus on the second last column, which shows you how much you need to save each month to reach a target corpus of Rs.1 crore on retirement. Just look at the contrast! If you have just 10 years to retirement, you must save Rs.38,160 per month in an equity fund SIP to reach Rs.1 crore on retirement. However, if you start planning 25 years before retirement, you just have to save Rs.3,675 per month to reach the same target. 

That is how much difference an early start makes. The last column shows how much you must save in inflation-adjusted terms, but that is only an added information.

Key takeaways for SIP Investment & Calculation: 

There are some important rules for your SIP to be effective so that you reach your target corpus of Rs.1 crore by retirement.

• Start as early as possible. The earlier you start, the more your corpus earns returns and these returns also generate returns. That is called the magic of compounding and can work wonders to your money in the long term.

• Over the long term, you can afford to take higher risk. Sensex has given 16.5% CAGR returns over last 40 years. So, 14% CAGR on equity funds is not only possible but also absolutely realistic. For long term investing, equity funds offer the best option.

• SIP is not just a random investment, but it is a discipline. Hence, it must be ensured that once you start the SIP, you don’t stop the SIP mid-way. That way, all the benefits of compounding are lost.

• Lastly, opt for the growth plans rather than the dividend plans as the growth plans have an automatic compounding facility built into them. Also, capital gains are more tax efficient compared to dividends on mutual funds.

The moral of the story is that no financial goal is too steep if you start early enough and invest regularly in the right asset class. That is what equity fund SIPs are all about!
 

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Glenmark Life Sciences IPO Day 1 Subscription

Glenmark Life Sciences IPO Day 1 Subscription
27/07/2021

The Rs.1,514 crore IPO of Glenmark Life Sciences, consisting of Rs.1,060 crore of fresh issue and Rs.454 crore offer for sale, got a solid response from retail investors on Day-1. As per the combined bid details put out by the BSE, Glenmark Life IPO had been subscribed 2.78 times, with chunk of the demand coming from the retail segment followed by HNI segment. 

As of close of 27 July, out of the 150.18 lakh shares on offer in the IPO, Glenmark Life Sciences saw applications for 417.17 lakh shares at the end of Day-1. This implies an overall subscription of 2.78 times. The granular break-up of subscriptions is interesting. The QIB portion got hardly any subscriptions on Day-1 as these QIB subscriptions typically come in on the last day.

 

Glenmark Life Sciences IPO Subscription Details Day 1

Date QIB NII Retail Total
July 27, 2021 17:00 0.00x 0.86x 5.17x 2.78x

 

However, it must be remembered that on 26 July, Glenmark Life has already done an anchor placement of 63.10 lakh shares to QIB investors like HSBC, Copthall, Kuber, Oaktree, IMF, Norwegian Pensions, Reliance General etc. The original 50% QIB quota for the IPO has been reduced by the anchor investment amount.

Read: 5 Reasons to invest in Glenmark Life Sciences IPO

 

HNI portion got subscribed just 0.85 times but the funded applications come in on the last day, when we will get a clearer picture. The real big story was the retail portion, which is already subscribed 5.16 times at the end of Day-1, showing strong retail investor appetite.

Among retail investors; out of the 75.43 lakh shares on offer, valid bids were received for 389.49 lakh shares, of which bids for 315.58 lakh shares were received at the cut-off price. The IPO is priced in the band of (Rs.695-Rs.720) and will close for subscription on Thursday, 29 July.

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Glenmark Life Sciences – 6 Facts to Know Before Investing

Glenmark Life Sciences IPO
27/07/2021

Glenmark Life Sciences IPO opens on 27 July and will close for subscription on 29 July. Priced in the price band of Rs.695-720. Here are some interesting facts you must know about Glenmark Life Sciences.

Glenmark Life Sciences: 6 Things You Should Know

• Glenmark Life Sciences is the active pharma ingredients (API) arm of Glenmark Pharma. Today, Glenmark Life Sciences accounts for 35-40% of the total valuation of Glenmark Pharma and Glenmark Life is estimated to be valued at a market cap of Rs.8,820 crore on the day of listing.

Also Read: 5 Reasons to Invest in Glenmark Life Sciences IPO

• Glenmark has a portfolio of 120 molecules and till May-21, Glenmark Life had filed a total of 403 Drug Master Files (DMF). The DMF is unique to the API industry and India has an inordinately share of DMFs filed.

• Glenmark has an installed capacity of 727 KL of API manufacturing annually and the expansion is likely to take the total installed capacity to 930 KL by 2023. Teva, Torrent, Aurobindo and KRKA are among its key customers among generic companies.

Read Now: Other Pharma API Stocks to Invest In

• In the last 3 years, Glenmark has started working with innovator pharmaceutical companies in the CDMO (contract development and manufacturing operations) space. While this is 10% of revenues, it is a high growth and high margin area.

• Glenmark Life currently has a portfolio of 120 molecules and these 120 molecules have an estimate market size of $160 billion by the year 2023. That leaves a huge scope for the growth of business for Glenmark Life.

• Between FY21 and FY23, Glenmark Life expects its sales to grow at a CAGR of 42%. During this same period, it expects its EBITDA to grow at a CAGR of 57% while the PAT is expected to grow at a CAGR of 72%. That should be able to justify current P/E ratio of 23X quite easily.
 

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