{"id":822,"date":"2021-07-22T13:28:15","date_gmt":"2021-07-22T13:28:15","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=822"},"modified":"2021-07-24T07:08:10","modified_gmt":"2021-07-24T07:08:10","slug":"glenmark-life-scienceswill-hit-the-primary-market-on-july-27-should-you-subscribe","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/glenmark-life-scienceswill-hit-the-primary-market-on-july-27-should-you-subscribe\/","title":{"rendered":"Glenmark Life Sciences will hit the primary market on July 27. Should you subscribe?"},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p>Investors must be aware with long history of Glenmark pharmaceuticals in the Indian equity market. This time its API (Active Pharmaceuticals Ingredients) arm Glenmark Life Science is going to list on the Indian bourses. The IPO of Glenmark Life Sciences is the 5<sup>th<\/sup> IPO in July after G R Infraprojects, Clean Science &amp; Technology, Zomato and Tatva Chintan Pharma. Net proceeds from the IPO will be directed to pay business purchase consideration as Glenmark Life Sciences got some manufacturing facilities and assets from parent company Glenmark in 2018 and became a subsidiary.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"counter-hierarchy counter-decimal ez-toc-grey\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list\"><li><a href=\"#Glenmark_Life_Sciences_IPO_Details\" title=\"Glenmark Life Sciences IPO Details\">Glenmark Life Sciences IPO Details<\/a><\/li><li><a href=\"#Composition_of_Issue_Size\" title=\"Composition\nof Issue Size\">Composition\nof Issue Size<\/a><\/li><li><a href=\"#About_the_Company\" title=\"About the\nCompany\">About the\nCompany<\/a><\/li><li><a href=\"#_Industry_Growth_Drivers\" title=\"&nbsp;Industry Growth Drivers\">&nbsp;Industry Growth Drivers<\/a><\/li><li><a href=\"#Peers_Comparison\" title=\"Peers\nComparison\">Peers\nComparison<\/a><\/li><li><a href=\"#Financials\" title=\"Financials\">Financials<\/a><\/li><\/ul><\/nav><\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Glenmark Life Sciences IPO Details<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>Issuer Company: Glenmark Life Sciences Ltd.<\/li><li>Industry: &nbsp;Pharmaceuticals<\/li><li>IPO Size: 1,513.60 cr.<\/li><li>Price Band: 695-720<\/li><li>Issue Open Date: 27 July, 21<\/li><li>Issue Close Date: 29 July, 21<\/li><li>Listing Date: 06 Aug, 21<\/li><li>Minimum Lot Size: 20 shares<\/li><li>Face Value: 2 Rs. Per share<\/li><li>Employee Discount:&nbsp; NA<\/li><li>Retail Allocation: 35%<\/li><li>Listing Exchange: NSE, BSE<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Composition\nof Issue Size<\/strong><\/h2>\n\n\n\n<p>The issue size of 1,513.6 cr. is a mix of fresh issue of Rs. 1,060\ncr. and offer for sale of Rs. 453.6 cr. at the upper price band. <\/p>\n\n\n\n<p>Offer for Sale: The object of the\nOffer for Sale is to allow the shareholders to sell an aggregate of up to 6.3\nmillion equity Shares held by them amounting at Rs. 453.60 cr. The company will\nnot receive any proceeds from the Offer for Sale. <\/p>\n\n\n\n<p>Fresh Issue: The company has planned to raise fresh capital\ncomprising an aggregate of 1,47,22,222 equity shares having Face Value \u20b92\naggregating up to Rs. 1,060 Cr at the upper price band of Rs. 720. Out of the\nnet proceeds<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>An amount of Rs. 800 cr. will be allocated for payment\nof outstanding purchase consideration to the promoter for the spin-off of the\nAPI business from the promoter into the Company pursuant to the Business\nPurchase Agreement dated October 9, 2018.<\/li><li>&nbsp;An amount\nof Rs. 152.76 cr. will be utilized for funding capital expenditure requirements.<\/li><li>Rest will be utilized for general corporate\npurpose.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About the\nCompany<\/strong><\/h2>\n\n\n\n<p>Glenmark Life Sciences is a wholly-owned subsidiary of\nGlenmark Pharmaceuticals Ltd. after it acquired 100% equity interest on July\n10, 2018. On January 1, 2019, the API business of Glenmark comprising of\nmanufacturing facilities, movable assets, intellectual property, employees and\nall the liabilities attributable to the API business was spun off into our\nCompany (the \u201cSpin-off\u201d). <\/p>\n\n\n\n<p>The API firm of Glenmark is a leading developer and manufacturer of select high value, non-commoditized active pharmaceutical ingredients (\u201cAPIs\u201d) in chronic therapeutic areas, including cardiovascular disease, central nervous system disease, pain management and diabetes. The company also manufactures and sells APIs for gastro-intestinal disorders, anti-infectives and other therapeutic areas. The API portfolio comprises specialized and profitable products, including niche and technically complex molecules. The firm has strong market share in select specialized APIs such as Telmisartan (anti-hypertensive), Atovaquone (anti-parasitic), Perindopril (antihypertensive), Teneligliptin (diabetes), Zonisamide (CNS) and Adapalene (dermatology). The company is increasingly providing contract development and manufacturing operations services to a range of multinational and specialty pharmaceutical companies.<\/p>\n\n\n\n<p>Must Read: <a href=\"https:\/\/www.invest19.com\/blog\/g-r-infra-and-clean-science-ipo-have-a-bumper-listing-what-investors-should-do-now\/\">G R Infra and Clean Science IPO have a bumper listing. What investors should do now?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">&nbsp;<strong>Industry Growth Drivers<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>Global formulation market was estimated to be\naround US$1,144 billion in 2020 and is expected to grow at a CAGR (2021\u20132026)\nof 3.4% to reach to about US$1,398 billion by 2026.<\/li><li>&nbsp;In\nthe global market, innovator formulations sales was around US$861.3 billion in\n2020 and it is expected to grow at a CAGR of 3.5% from 2021 to 2026.<\/li><li>Global API (Active Pharmaceuticals Ingredients)\nmarket was estimated to be around US$181.3 billion in 2020 and is expected to\ngrow at a CAGR of 6.2% to reach to about US$259.3 billion by 2026.<\/li><li>India imports nearly 68% of API, by value, from\nChina\nbut supply may disrupt due to China\u2019s \u201cBlue Skies\u201d policy implementation\n(2018) and COVID-19 pandemic.<\/li><li>Indian Government has taken a lot of initiatives\nto push API industry such as \u2018Make In India\u2019 program and \u2018Productivity Linked\nIncentives (PLI)\u2019 Scheme.<\/li><li>Establishment of an API manufacturing facility\nin India takes two-fifth of the total cost incurrent in establishing similar\nfacility in western countries. This will make our production cheaper.<\/li><li>India accounts highest number of\nUSFDA-approved API facilities.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Peers\nComparison<\/strong><\/h2>\n\n\n\n<p>The company will face tough competition from Divis Laboratories,\nLauras Labs, Shilpa Medicare, Aarti Drugs and Solara Active Pharma Sciences.<\/p>\n\n\n\n<p>Listed peers have been the top performers from last year. All\nstocks have delivered 2-3 times returnto the investors. Out of the listed\npeers, Divis Lab has the highest market capitalization followed by Laurus Lab, Aarti\nDrugs, Solara Active Pharma and Shipla Medicare. Divis Lab has been one the\nconsistent compounder for the investors in last five years.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Financials<\/strong><\/h2>\n\n\n\n<p><strong>Disaggregation of\nrevenue as per geographical areas (Rs. in millions)<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"427\" height=\"275\" src=\"https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/07\/Screenshot-174.png\" alt=\"\" class=\"wp-image-824\" srcset=\"https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/07\/Screenshot-174.png 427w, https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/07\/Screenshot-174-300x193.png 300w\" sizes=\"auto, (max-width: 427px) 100vw, 427px\" \/><\/figure>\n\n\n\n<p><strong>Observations<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>In 2019, company was generating more revenues\noutside India while in the last two years company has increased its dependency\nfor revenue on Indian market.<\/li><li>Revenues from \u2018Within India\u2019 have grown at\n71.62% in last two years.<\/li><li>While, revenues \u2018Outside India\u2019 have grown at\n25.61% only since 2019.<\/li><\/ul>\n\n\n\n<p><strong>Financial Statements<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td>\n  Income Statement (In Millions)\n  <\/td><td>FY21<\/td><td>   FY20 <\/td><td>   FY19<\/td><\/tr><tr><td>\n  Gross Operating Income\n  <\/td><td>\n  18859.76\n  <\/td><td>\n  15493.03\n  <\/td><td>\n  8868.65\n  <\/td><\/tr><tr><td>\n  Cost of Employee &amp; Inventory\n  <\/td><td>\n  10546.28\n  <\/td><td>\n  8327.38\n  <\/td><td>\n  4585.78\n  <\/td><\/tr><tr><td>\n  Other Expenses\n  <\/td><td>\n  2394.63\n  <\/td><td>\n  2326.15\n  <\/td><td>\n  1801.23\n  <\/td><\/tr><tr><td>\n  EBITDA\n  <\/td><td>\n  5918.85\n  <\/td><td>\n  4839.5\n  <\/td><td>\n  2481.64\n  <\/td><\/tr><tr><td>\n  Depreciation\n  <\/td><td>\n  333.94\n  <\/td><td>\n  293.68\n  <\/td><td>\n  192.62\n  <\/td><\/tr><tr><td>\n  Interest \n  <\/td><td>\n  875.47\n  <\/td><td>\n  335.15\n  <\/td><td>\n  6.05\n  <\/td><\/tr><tr><td>Profit Before Tax   <\/td><td>\n  4709.44\n  <\/td><td>\n  4210.67\n  <\/td><td>\n  2282.97\n  <\/td><\/tr><tr><td>\n  &nbsp;Tax\n  <\/td><td>\n  1193.63\n  <\/td><td>\n  1079.69\n  <\/td><td>\n  327.05\n  <\/td><\/tr><tr><td>Profit After Tax   <\/td><td>   &nbsp;3515.81<\/td><td>   3130.98   <\/td><td>   1955.92   <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li>Company has delivered a growth in revenues by 45.8% in last two years.<\/li><li>EBITDA margins of the company stood at 31.38%. <\/li><li>Company is debt-free while its interest payments were for business purchase consideration. <\/li><li>Company has positive cash flows at Rs. 115.6 cr. and able to fund their working capital requirements smoothly.<\/li><li>More than 60% of total cost is allocated to cost of raw materials.<\/li><li>Return on Equity or Net Worth is 46.71%.<\/li><li>Considering the upper price band at Rs. 720 and FY21 Earning Per Share (EPS) of Rs. 32.61, the company is demanding a P\/E multiple of 22.07x, much lower than the Industry P\/E of 39.88x.<\/li><\/ul>\n\n\n\n<p>Also Read: <a href=\"https:\/\/www.invest19.com\/blog\/tatva-chintan-pharma-will-hit-the-primary-market-on-july-16-should-you-subscribe\/\">Tatva Chintan Pharma will hit the primary market on July 16. Should you subscribe?<\/a><\/p>\n<div class='epvc-post-count'><span class='epvc-eye'><\/span>  <span class=\"epvc-count\"> 2,513<\/span><\/div><div class=\"pld-like-dislike-wrap pld-template-1\">\n    <div class=\"pld-like-wrap  pld-common-wrap\">\n    <a href=\"javascript:void(0);\" class=\"pld-like-trigger pld-like-dislike-trigger \" title=\"\" data-post-id=\"822\" data-trigger-type=\"like\" data-restriction=\"ip\" data-ip-check=\"0\" data-user-check=\"1\">\n                        <i class=\"fas fa-thumbs-up\"><\/i>\n                    <\/a>\n    <span class=\"pld-like-count-wrap pld-count-wrap\">8    <\/span>\n<\/div><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Investors must be aware with long history of Glenmark pharmaceuticals in the Indian equity market. This time its API (Active Pharmaceuticals Ingredients) arm Glenmark Life [&hellip;] <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/www.invest19.com\/blog\/glenmark-life-scienceswill-hit-the-primary-market-on-july-27-should-you-subscribe\/\">Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":825,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[70,2,7,10],"tags":[],"class_list":["post-822","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ipo","category-stock-market","category-investment","category-featured"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/822","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=822"}],"version-history":[{"count":4,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/822\/revisions"}],"predecessor-version":[{"id":832,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/822\/revisions\/832"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/825"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=822"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=822"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=822"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}