Glenmark Life Sciences IPO

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About Glenmark Life-Sciences IPO

(i) Glenmark Life-Science IPO is a leading API manufacturer in India, and it is a subsidiary of Glenmark Pharmaceuticals.

What is API?

It is a chemical compound that is the most important raw material to produce a finished medicine.

(ii) Glenmark Life-Science IPO is a developer and manufacturer of select high value, non-commoditized active pharmaceutical ingredients (“APIs”) in chronic therapeutic areas, including cardiovascular disease (“CVS”), central nervous system disease (“CNS”), pain management and diabetes. They also manufacture and sell APIs for gastro-intestinal disorders, anti-infectives and other therapeutic areas.

(iii) They are a research and development (“R&D”)-driven API manufacturer, focused on undertaking dedicated R&D in the existing products and in areas where they believe there is growth potential in the future. They believe that maintaining high standards of process innovation and quality in the R&D and manufacturing operations is critical to the brand and maintenance of long-term relationships with the customers.

When it is formed?

They are a wholly-owned subsidiary of the Glenmark Pharmaceuticals Limited (“Glenmark”), a research-oriented, innovation led, global pharmaceutical company, which was established in 1977 and is listed on the BSE and NSE. In 2001-2002, Glenmark launched the API manufacturing business by setting up a manufacturing facility in Kurkumbh in the state of Maharashtra, India and focused on growing this business over the next 18 years. In 2019, the API manufacturing business of Glenmark was sold and spun off.

Product Portfolio?

As of December 31, 2020, Glenmark Life-Sciences IPO had a portfolio of 120 molecules globally. They sold APIs in India and exported the APIs to multiple countries in Europe, North America, Latin America, Japan and the rest of the world (“ROW”).

As of April 7, 2021, they had filed 399 Drug Master Files (“DMFs”) and Certificates of suitability to the monographs of the European Pharmacopoeia (“CEPs”) across various major markets (i.e. United States, Europe, Japan, Russia, Brazil, South Korea, Taiwan, Canada, China and Australia).

Manufacturing Unit

They currently operate four multi-purpose manufacturing facilities which are situated on leasehold properties located at ankleshwar and Dahej in the state of Gujarat, India, and Mohol and Kurkumbh in the state of Maharashtra, India with an aggregate annual total installed capacity of 725.8 KL as of December 31, 2020.

Industry Size of APIs

The global API market was estimated to be around US$181.3 billion in 2020 and is expected to grow at a CAGR of 6.2% to reach to about US$259.3 billion by 2026.

Objects of the Glenmark Life Sciences IPO:

The object of the offer comprises of Fresh issue & Offer for sale, Net proceeds will be used for: 1. Payment of the outstanding purchase 2. Funding capital expenditure requirements 3. General corporate purposes.

Glenmark Life Sciences IPO Details:

Open Date: Jul 27 2021
Close Date: Jul 29 2021
Total Shares: 6300000
Face Value: ₹ 2 Per Equity Share
Issue Type: Book Building
Issue Size: 1513 Cr.
Lot Size: 20 Shares
Issue Price: ₹ 695 - 720 Per Equity Share
Listing At: NSE,BSE
Listing Date: Aug 06 2021

Promoters And Management:

(i) Glenn Saldanha is the Chairman and non-executive director of the Company. He holds a bachelor’s degree in pharmaceutical sciences from University of Bombay. He also holds a master’s degree in business administration from the Leonard N. Stern School of Business at New York University. He is also the chairman and managing director of the Promoter, Glenmark Pharmaceuticals Limited. (ii) V.S Mani is a non-executive director of the Company. He is a qualified chartered accountant. Prior to joining the Company, he was the president (finance) at the Bhartiya City Developers Private Limited. He was also the chief financial officer at Cipla Limited. (iii) Yasir Rawjee is the Managing Director and Chief Executive Officer of the Company. He leads the overall operations of the Company and is responsible for the overall business strategy of our Company. He holds a bachelor’s degree in science from St. Xavier’s College, University of Bombay and a bachelor’s degree in science (technology) from University Department of Chemical Technology, University of Bombay. He also holds a PhD from Texas A&M University, U.S.A. Prior to joining the Company, he was the head of global API operations at Mylan Laboratories Limited.

Financials of Glenmark Life Sciences IPO:

Particulars (in Cr.) Mar-21 Mar-20 Mar-19
Sales 1885.17 1537.31 886.42
Cost of Material Consumed 976.20 695.10 653.89
Change in Inventories -70.70 -4.64 -301.59
Employee Benefits Expense 149.13 142.28 106.28
Other Expenses 239.46 232.62 180.12
Operating Profit 591.08 471.95 247.72
OPM % 31.35% 30.70% 27.95%
Other Income 0.81 11.99 0.44
Interest 87.55 33.52 0.61
Depreciation 33.39 29.37 19.26
Profit before tax 470.94 421.07 228.30
Total Tax Exps 119.36 107.97 32.71
Net Profit 351.58 313.10 195.59
NPM % 18.65% 20.37% 22.07%
No. of shares 10.78 10.78 10.78
EPS in Rs 32.61 29.04 24.64
Graphical Representation of Financials of Glenmark Life Sciences.

Comparison With Peers:

Name of the company 5-year Revenue Growth 5 year PAT Growth EBITDA Margin (FY20) ROE  (FY20) Debt to Equity P/E 3 Years Return
Glenmark Life Sciences Ltd. (3 Years) 29% 22% 31% 46.75% 0.00 - -
Divis Laboratories Ltd 11% 13% 41% 23.90% 0 64.32 63.96%
Laurus Labs Ltd 20% 39% 32% 45.16% 0.57 36.24 95.28%
Shilpa Medicare Ltd 3% 7% 20% 10.53% 0.49 34.66 20.09%
Aarti Drugs Ltd 13% 28% 20% 35.81% 0.33 23.79 76.77%
Solara Active Pharma Sciences Ltd (3 Years) 5% 54% 24% 17.17% 0.33 27.07 115.09%

Recommendation on Glenmark Life Sciences IPO:

Review and Recommendation of Glenmark Lifesciences IPO by IZ team is 6/10. 1. Glenmark Lifesciences is a leading API company in India and it is a subsidiary of Glenmark Pharma. 2. The API market is slowly shifting from China to India after Chinese Government started closing down those chemicals companies which were polluting the environment. 3. It is a debt free company and has shown excellent growth in the numbers in the last 3 years. 4. P/E of 25x looks reasonable priced.

Registrar of Glenmark Life Sciences IPO:

  1. Kfin Technology Private Limited

Company Address:

Glenmark Life Sciences Limited Plot No. 170-172, Chandramouli Industrial Estate, Mohol Bazarpeth, Solapur 413 213, Phone: +91 2189 234456/ +91 2189 Email: complianceofficer@glenmarklifesciences.com Website: http://www.glenmarklifesciences.com/

Discussion on Glenmark Life Sciences IPO:

3 Comments

    That was due to ~965 Crores of loan that was outstanding on the company to promoters when Glenmark Lifesciences business was separated. Now, as on 31.06.2021, the total debt left was 800 Crores. The company will pay back 800 Crores from the IPO proceeds. Same was mentioned in the Objectives of the IPO.

    In financial it shows intrest payment of 87.55 cr and in comparison with peers it shows D/E =0
    Am I missing something?

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