The Sai Life Sciences IPO opened for subscription on December 11, 2024, with a price band of ₹522-₹549 per share. The offering includes a fresh issue of ₹950 crore and an offer for sale (OFS) of ₹2,092.62 crore. The IPO will close on December 13, 2024, with shares set to list on the BSE and NSE on December 18, 2024.
IPO Details
- Issue Size: ₹3,042.62 crore
- Price Band: ₹522-₹549 per share
- Lot Size: Minimum 27 shares
- Reservation:
- 50% for Qualified Institutional Buyers (QIBs)
- 15% for Non-Institutional Investors (NIIs)
- 35% for Retail Investors
Sai Life Sciences: Business Overview
Incorporated in 1999, Sai Life Sciences is a leading Contract Research, Development, and Manufacturing Organization (CRDMO) specializing in small-molecule new chemical entities. The company operates globally, serving clients in the US, UK, Europe, and Japan, including 18 of the top 25 pharmaceutical companies by revenue.
Financial Highlights
- FY24 Performance:
- Revenue: ₹6,500 crore
- Operating Margins: 19%
- ROE: 8.5%
- ROCE: 11.6%
- H1 FY25:
- Revenue: ₹693.35 crore
- Net Profit: ₹28.01 crore
The company has shown strong growth, with a CAGR of 29.8% in revenue, 53.4% in EBITDA, and 264.7% in PAT between FY22 and FY24.
Use of Proceeds
- Debt Repayment/Prepayment: ₹720 crore
- General Corporate Purposes
Debt reduction is expected to lower finance costs by ₹56 crore annually, boosting profitability.
Anchor Investors
Sai Life Sciences raised ₹912.78 crore from marquee anchor investors, including:
- Fidelity
- BlackRock
- Goldman Sachs
- Morgan Stanley
Expert Opinions
SBI Securities
- Rating: Subscribe (Long-Term)
- Analysis: Strong financial growth with potential for improved profitability post debt repayment.
Swastika Investmart
- Rating: Cautious
- Analysis: High valuation and significant OFS reduce direct benefits to the company.
Nirmal Bang Securities
- Rating: Subscribe (Long-Term)
- Analysis: Operational margin improvements and strong R&D investments provide growth potential.
StoxBox
- Rating: Subscribe
- Analysis: High P/E of 121.2x but favorable industry trends make it attractive for medium to long-term investors.
Aditya Birla Capital
- Rating: Subscribe (Long-Term)
- Analysis: Positioned to benefit from supply chain diversification trends and growing demand in the pharmaceutical sector.
Industry and Valuation
- Valuation: P/E of 121.2x at the upper price band.
- Peer Comparison: Sai Life Sciences has lower operating margins than peers but potential to improve through R&D and operational excellence.
Should You Subscribe?
Why You Should Subscribe:
- Strong Financial Growth: Demonstrated robust revenue and profit growth in recent years.
- Global Presence: Established client base, including top pharmaceutical companies.
- Debt Reduction: Proceeds from the IPO will lower finance costs, boosting profitability.
- Favorable Industry Trends: Positioned to benefit from global supply chain diversification.
Cautionary Factors:
- High valuation compared to peers.
- Significant proportion of OFS, reducing direct company benefits.
Conclusion
Sai Life Sciences IPO presents an attractive opportunity for long-term investors due to its strong growth trajectory, global presence, and favorable industry dynamics. However, the high valuation may pose a concern for short-term investors.
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