Gland Pharma

IPO Size

`6,479.55 Cr

Price Band

`1490-1500 Per Share

Minimum Lot Size

10 Share

Face Value

`1 Per Share

Employee Discount

NA

Retail Allocation

35%

Issue Open Date

09 Nov, 20

Issue Close Date

11 Nov, 20

Listing Date

20 Nov 2020

About the Company:

Hyderabad-based-Indian drug-maker was established in 1978 as a contract manufacturer of small volume liquid parenteral products, to become one of the largest and fastest growing injectable-focused companies, with a global footprint across 60 countries, including the United States, Europe, Canada, Australia, India and other markets. The company operates a Business to Business (B2B) model and claims an excellent track record in the development, manufacturing and marketing of complex injectables. The company has extensive portfolio of complex products supported by internal R&D and regulatory capabilities. The manufacturing facilities of the company have been approved by the US Food and Drug Administration (USFDA) and United Kingdom Medicines and Healthcare Products Regulatory Agency (UK MHRA).

Outstanding Litigation:

S.No. 1 - Company 2 - Directors 3 - Promoters
Entity Name By the Company Against the Company By the Director Against the Director By the Promoter Against the Promoter
Criminal cases - - - - - -
Material civil cases - - - - 40 -
Taxation matters - 73.95 - - - -
Regulatory Procedings - 18.5 - - - -
Amt. (In Million Rs.) - 92.45 - - 40 -

Financial Statements:

Income Statement FY20 FY19 FY18
Gross Operating Income 27724.08 21297.67 16716.82
Cost of Employee & Inventory 14581.85 11540.04 9031.38
Other Expenses 2195.88 1836.96 1844.69
EBITDA 10946.35 7920.67 5840.75
Depreciation 945.87 821.2 783.68
Interest  71.82 36.69 42.42
Exceptional Items 0 200  
Profit Before Tax 9928.66 6862.78 5014.65
 Tax 2200.08 2344.22 1804.14
Profit After Tax 7728.58 4518.56 3210.51

Recommendation

As per CA Ajay Chouhan, SEBI Registered Research Analyst, recommendation is to ‘Subscribe but expect no listing gains’. On the financial front, the company is almost debt-free having 4.69 crores as borrowing on its balance sheet. The drugmaker had posted 29% increase in revenues this year while net profits were increased more than 70%. Return on Net Worth (RONW) of the company is 21.20%. B2B solution drugmakers have performed stellar in the recent years in Indian equity market and same is expected from Gland Pharma. Considering its global peers; Recipharm and Lonza,the drugmakers are trading at a Price-Earnings multiple of 44x and 55x. While, the domestic drugmaker is priced at a Price-Earnings multiple of 20x, which makes it an attractive bet to bet upon for long term gains.

Promoter of the Company

The promoters of the company are Shanghai Fosun Pharmaceutical (Group) Co. Ltd and Fosun Pharma Industrial Pte. Ltd.

Peer Comparison

Gland pharma is a pure play in injectable business with a portfolio of complex products supported by internal Research and Development department. Therefore, the company has no competitors in the Indian economy. On the global front, the company has two competitors Recipharm and Lonza having their headquarters in Sweden and Basel, Switzerland.

Objectives of the Issue

Offer for Sale

The object of the Offer for Sale is to allow the shareholders to sell an aggregate of up to 34,863,635 Equity Shares held by them. The company will not receive any proceeds from the Offer for Sale. Offer for Sale Size is of 34,863,635 Equity Shares of FV ₹1 aggregating up to ₹5,229.55 Cr.

Fresh Issue

The company has planned to raise fresh capital comprising an aggregate of 8,333,333 shares having FV of ₹1 aggregating up to Rs. 1,250 Cr at the upper price band of Rs. 306. The net proceeds will be utilized majorly for taking care of working capital requirements and funding capital expenditures while rest will be utilized for other corporate purposes.