The Glenmark Life Sciences IPO opened for subscription on July 27. The company and the shareholders plan to raise Rs 1,514 crore from the offering. What’s the forecast for Glenmark Life Sciences stock? Should you buy the IPO stock or give it a miss?
Glenmark Life Sciences is a spin-off of Glenmark Pharmaceuticals. The company is well-positioned in the Active Pharmaceutical Ingredient (API) business.
Glenmark Life Sciences IPO date and price
Glenmark Life Sciences IPO comprises a fresh issue of 1.47 crore shares and an offer for sale (OFS) of up to 63 lakh shares by existing shareholders. The price band for the offering has been set at Rs 695–720 per share. The issue's market lot size is 20 shares. Glenmark Life has reserved up to 50 percent of the offering for QIBs (qualified institutional buyers), up to 15 percent for NIIs (non-institutional investors), and up to 35 percent for retail investors. The offering opened for subscription on July 27 and will close on July 29.
The net proceeds from the offering will be used for payment to Glenmark Pharmaceuticals and general corporate purposes. Glenmark Life shares will likely get listed on the BSE and NSE on August 6. The GMP (grey market premium) for the stock has shot up to 18 percent of the IPO price. According to brokers in the grey market, the GMP is reflecting at Rs 125–130 per share.
Glenmark Life Sciences is profitable.
Glenmark Life reported a net income of Rs 351.6 crore in fiscal 2021 (ended March 31) compared to Rs 313.1 crore in fiscal 2020. Its revenue rose 23 percent YoY to Rs 1,885.2 crore in fiscal 2021.
Glenmark Life Sciences’ valuation
The IPO’s terms put Glenmark Life’s 2021 PE multiple at 25.1x. Considering that peers Divi’s Laboratories, Laurus Labs, and Shilpa Medicare are trading at PE multiples of 64.0x, 36.1x, and 36.5x, respectively, Glenmark Life stock looks undervalued and worth considering.
Glenmark Life Sciences IPO stock is a good buy.
Glenmark Life’s IPO is a good long-term investment based on its attractive valuation and strong growth prospects. The company is a leading manufacturer of high-value, non-commoditized APIs in chronic therapeutic areas including diabetes, cardiovascular, and central nervous system. Currently, it operates four manufacturing facilities with an aggregate annual total installed capacity of around 727 kilo-liters as of March 31, 2021.
Glenmark Life has a portfolio of 120 molecules globally. Its products are being sold in India and also exported to several countries including the U.S., Europe, and Japan. The global API market size was estimated to be worth $181.3 billion in fiscal 2020 and is expected to grow at a CAGR of 6.2 percent by fiscal 2026. Glenmark Life’s key customers include Teva Pharma Industries, Torrent Pharmaceuticals, Glenmark, and Aurobindo Pharma.
How to buy Glenmark Life Sciences shares
To buy Glenmark Life shares, U.S. investors must first open a stock trading account with a registered broker who offers to trade on Indian stock markets. For example, Interactive Brokers allows users to buy or sell Indian stocks.