While Fosun Pharma Industrial Pte of China offers to sell 1.9 crore equity shares, Gland Celsus Bio Chemicals plans to sell 1 crore shares. The other two shareholders, Empower Discretionary Trust and Nilay Discretionary Trust, are downloading shares of 35.73 lakh and 18.45 lakh, respectively.
The Shanghai-owned company Fosun Pharma raised a total of Rs 1,943.86 crore from 70 anchor investors. The broadcast will close on November 11. While analysts are optimistic about the company’s prospects and recommend subscribing to the issue, some believe the valuations are a bit expensive.
This is what the main brokerages say on the subject:
Geojit Financial Services: Subscribe
This brokerage noted that the company has a strong launch history with 51 products launched in FY 20 and 18 in the June quarter of FY 21. In the upper price band of Rs 1,500, the stock is available at PE 20 times on an annualized basis, which the brokerage finds attractive. “With a strong business model, no listed peers and a positive outlook for the pharmaceutical sector, we assigned a Subscription rating to the issue,” the brokerage said.
Sharekhan: No score
Sharekhan said the offering is priced at 29.8 to 30 times its fiscal year 2020 EPS in the lower and upper price bands. The company, he said, is present in one of the fastest growing generic injectables spaces, with extensive vertical integration and follows a B2B model in all markets.
“Gland is expanding its manufacturing footprint, has a strong ANDA portfolio on file, and is also expanding its geographic footprint into new markets. In terms of strong domain expertise, a strong and consistent earnings track record, and healthy rates of return, the future looks good, “it said.
Choice Broking: Subscribe With Caution
Choice Broking advised investors to underwrite cautiously, as although the fundamentals of the business were solid, the valuation seemed stretched. In the higher price band of Rs 1,500 per share, Gland Pharma’s stock is valued at a 12-month P / E multiple of 31.7 times, which is in line with the pharmaceutical industry P / E of 32 , 3 times, said Choice Broking in a Note.
BP Equities: Subscribe for Long-Term Profits
BP Equities recommended subscribing to the issue from a medium to long-term perspective, citing the company’s niche presence, superior business performance, a healthy balance sheet, the complex nature of the business and a strong product portfolio.
GEPL Capital: Subscribe
The brokerage noted that the drugmaker focuses on complex injectables that have high entry barriers and strategic partnerships to penetrate new markets such as China, which can be a lucrative opportunity for the company.
“With a strong portfolio of products and more complex products under development, focus on B2B expansion and licensing, and opportunities to enter more therapy areas, the offering looks attractive,” he added.
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