Gland Pharma IPO Details

9 Nov 2020  Read 4594 Views

The stock market is one of the most rewarding investment plans in India. Individuals put resources into the stock market since it can possibly produce attractive returns in a little range of time. Investors trade in the stock market either through the primary market or through the secondary market.

The primary market includes putting resources into the stock market by applying to the Initial Public Offering (IPO) of an organization while the auxiliary or secondary market includes buying and selling shares directly from the stock trade.

IPO stands for Initial Public Offering. It is the cycle by which a privately owned business can open up to the world by offering its shares to the general public. The organization announcing or doing it may be a new or an old organization. With Initial Public Offering, the organization gets its shares listed on the stock exchange.

About the company - Gland Pharma

Established in Hyderabad, India in 1978, Gland Pharma has grown to become one of the biggest and quickest developing injectable-centered organizations. The organization has a portfolio of injectable items across different helpful areas and delivery systems.

It has a presence in sterile injectables, oncology, and ophthalmics, and centres around complex injectables, NCE-1s, First-to-File items, and 505(b) (2) filings. It offers its products through a business-to-business (B2B) model across 60 nations over the globe (as of June 30, 2020), which include the United States, Europe, Canada, Australia, India and other markets.

Gland Pharma has seven manufacturing offices in India, containing four completed formulations facilities with a sum of 22 production lines and three API facilities. It has a history of working a B2B model with some driving pharma groups like Sagent Pharmaceuticals Inc., Apotex Inc., Fresenius Kabi USA LLC, Athenex Pharmaceutical Division LLC (US), and more.

This B2B model is supplemented by a business-to-client (B2C) model in India – the home market of Gland Pharma, utilizing its image quality and deals organization.

Promoters and Shareholders

The company is now a public limited company. This company was started by PVN Raju, but there is a catch. In 2017, Shanghai-based Fosun Pharma acquired a 74% stake for over $1.2 Bn. Currently, the promoters of the company are Fosun Singapore which is own by (Shanghai Fosun Pharma).

Financials of Gland Pharma

Particulars

For the year ended (₹ in million)

 

30-June-20

31-Mar-20

31-Mar-19

31-Mar-18

Total Assets

46,912.65

40,860.39

35,235.49

29,294.68

Total Revenue

9,162.89

27,724.08

21,297.67

16,716.82

Profit After Tax

3,135.90

7,728.58

4,518.56

3,210.51

The financials have always been good. As we can see, from 2018 to 2019, there is an increase of 27.4% in the total income. In 2020, there is a 30.17% growth in revenues. Also, if we look at the profits, they have increased in 2019 and 2020 by 40.74% and 71.04% respectively, which suggests that the company looks after cost optimization. This shows how robust the company is.

Valuation of Gland Pharma

Valuation 

FY 2021

FY 2020

Price to Book Value (P/B)

5.86

6.37

Price to Earnings Value (P/E)

18.53

30.07

Industry P/E (TTM)

 

36.00

On the upper-value band of Rs 1,500 and EPS of Rs 49.88 for FY20, the P/E proportion works out to be 30x.

  • For the most recent 3 years, normal EPS of Rs 38.11, the PE proportion is 39.3x. This means that the organization is soliciting the issue cost from Rs 1,500 of the upper-value band in the P/E scope of 30x to 39.3x. 
  • There are no recorded peers who are doing similar business; consequently, one can't discover whether the issue cost is undervalued or overrated. In any case, one can say that the P/E scope is high, considering its scope from 30x to 39x.

SWOT Analysis

Strengths

  • Vertically integrated injectables manufacturing capability.
  • Diversified B2B Business.
  • High Regulatory compliance.
  • High entry barriers.
  • Good financial track record.
  • Professional Management.

Weakness

  • High Concentration of revenues from the US.
  • Chinese promoters are a problem due to border tension.

Opportunities

  • Scope of growth as the pharma sector is growing globally as they make complex injectables.
  • Leverage high entry barriers by diversifying their portfolios and make new delivery systems.
  • Availability of cost-effective and skilled manpower in India.

Threats 

  • COVID-19 is a threat as supply disruptions have occurred.
  • Dependence on China for the supply of raw materials.

Gland Pharma IPO Details

IPO Date

Nov 9, 2020 - Nov 11, 2020

Issue Type

Book Built Issue IPO

Issue Size

43,196,968 Eq Shares of ₹1

(aggregating up to ₹6,479.55 Cr)

Fresh Issue

8,333,333 Eq Shares of ₹1

(aggregating up to ₹1,250.00 Cr)

Offer for Sale

34,863,635 Eq Shares of ₹1

(aggregating up to ₹5,229.55 Cr)

Face Value

₹1 per equity share

IPO Price

₹1490 to ₹1500 per equity share

Market Lot

10 Shares

Min Order Quantity

10 Shares

Listing At

BSE, NSE

Gland Pharma IPO Lot Size and Price (Retail)

Application

Lots

Shares

Amount (Cut-off)

Minimum

1

10

₹15,000

Maximum

13

130

₹195,000

Gland Pharma IPO Tentative Dates

Bid/Offer Opens On Nov 9, 2020
Bid/Offer Closes On Nov 11, 2020
Finalisation of Basis of Allotment Nov 17, 2020
Initiation of Refunds Nov 18, 2020
Credit of Shares to Demat Acct Nov 19, 2020
IPO Shares Listing Date Nov 20, 2020

Objectives of the IPO

  • Offer For Sale (OFS) – The promoters, selling to investors will be qualified for the returns from the proposal available to be purchased. The organization won't get any returns from the offer for sale. 
  • Fresh issue: Company is putting together the new issue of offers and would use the returns for the accompanying: 
    • Gradual working capital necessities.
    • Capital expenditure necessities and,
    • General corporate purposes.

Strategies that the company wants to adopt

  • Expand product portfolio and delivery frameworks to drive income growth.
  • Continue to put resources into manufacturing and related technological abilities to satisfy the future need.
  • Increase current market presence and enter new business sectors.
  • Align with Shanghai Fosun Pharma to expand a piece of the overall industry.
  • Pursue key acquisitions and associations.
  • Continued spotlight on cost management.

Risk in the IPO

  • The Pharma industry is intensely managed, and business organizations require a few endorsements, licenses, enrollment, and consents. Any change in such guidelines can postpone the endorsements and can affect the performance and income of the organization.
  • An organization's prosperity relies significantly upon the business’s courses of action with its advertising accomplices and clients for the offer of its items. If such courses of action are ended for any reason, it would affect the organization's business.
  • Company API creation interference could affect its deals.
  • Manufacturing or quality control issues may upset the pharma business, harm organization notoriety, and uncover possible suits or liabilities which could affect the business.
  • The company business is dependent on the sale of products in 60+ nations through its key clients and key business sectors. Any loss of such clients can bring about a decrease in deals and further affect organization edges.

Reasons to invest

  • Gland Pharma is the fastest developing high complex generic injectable organization. Its products are offered to 60+ nations over the world.
  • The organization has posted solid revenue gain over the most recent 3 years. Its income has grown from Rs 1,671.6 Crores in FY2018 to Rs 2,772.4 Crores in FY2020.
  • It is producing significant and improved products over the most recent 3 years.

Closing thought: Should you invest?

Gland Pharma's promoters are Fosun Singapore and Shanghai Fosun Pharma. Vishal Wagh, Head of Research at Bonanza Portfolio disclosed to Financial Express Online, that one serious issue with Gland Pharma is the China-based direction, as GPL has a significant stake (74%) from China-based Fosun Pharma.

Presently, because of the COVID-19 pandemic, there is a global anti-China wave. Numerous nations are taking majors to boycott China. "In this way, there is a vulnerability about the near term future. It is smarter to keep away from it specifically when the second wave of Covid has already started in many nations," Wagh added.

Despite what might be expected, research firm GEPL Capital has prescribed a 'buy-in' to the issue as it is evaluated at P/E of 18.52x on annualized EPS of the quarter finished June 2020. "With a solid item pipeline and more unpredictable items being worked on, centre around B2B development and authorizing and occasions to enter more treatment territories, the offer looks appealing," it added.

So, what’s going to be your call? Will Invest or let go?

About the Author: Ishita Jha | 21 Post(s)

Ishita Jha is an MBA Finance student of BIMTECH, now a blogger; trying to survive the pandemic recruitments. She can be found researching, exercising, and binging to balance life. She finds her happy place in writing.

Liked What You Just Read? Share this Post:

Finology Blog / Invest / Gland Pharma IPO Details

Wanna Share your Views on this? Comment here: