Gland Pharma IPO, Subscribe or Not?

About the Company:

Gland Pharma was established in Hyderabad, India in 1978 and is one of the fastest-growing generic injectable companies. The company has a strong presence in sterile injectables including oncology and ophthalmic and focus on high-value generics, such as complex molecules, First-to-File products and 505 (b)(2) filings for new drug applications. They have a portfolio of injectables across various therapeutic areas and delivery systems and they offer an array of injectables developed independently by them.

The company follows a business to business (B2B) model to sell its products in over 60 countries including the United States, Europe, Canada, Australia, India and the rest of the world.

About the IPO

The IPO of Gland Pharma aims at raising INR 6,480 crores out of which the fresh issue is of INR 1,250 crores comprising 4,31,96,968 shares and the remaining INR 5229.55 crores will be raised through offer for sale of 3,48,63,635 shares. The IPO will open for subscription on 9th November (Monday) and close on 11th November (Wednesday). The price band has been fixed at ₹1490 to ₹1500 with the minimum lot size of 10 shares. This means one has to pay at least ₹15,000 to bid for the issue.

Citi Group Global Markets India, Haitong Securities India, Kotak Mahindra Capital Company and Nomura Financial Advisory and Securities (India) are the leading book managers for the issue.

Gland Pharma IPO Details

IPO Date	9th November, 2020 to 11th November, 2020
Issue Type	Book Built Issue IPO
Issue Size	4,31,96,968 Eq Shares of ₹1 (aggregating up to ₹6479.55 Cr)
Fresh Issue	83,33,333 Eq shares of ₹1 (aggregating upto ₹1250 Cr)
Offer For Sale	3,48,63,635 Eq shares of ₹1 (aggregating upto ₹237.6 Cr)
Face Value	₹1 per equity share
IPO Price	₹1490 to ₹1500 per equity share
Market Lot	10 Shares
Min Order Quantity	10 Shares
Listing at	BSE, NSE

Gland Pharma IPO Tentative Timetable

Bid/Offer Opens On	9th Nov, 2020
Bid/Offer Closes On	11th Nov, 2020
Finalisation of Basis of Allotment	17th Nov, 2020
Initiation of Refunds	18th Nov, 2020
Credit of Shares to Demat Acct	19th Nov, 2020
IPO Shares Listing Date	20th Nov, 2020

Lot Size And Price

Application	Lots	Shares	Amount
Minimum	1	10	₹15,000
Maximum	13	130	₹1,95,000

Promoter Holding

Pre Issue Share Holding	74%
Post Issue Share Holding

Objective of the issue:

The company will utilise the net fresh issue proceeds to finance the increasing working capital requirements of the company, funding capital expenditure requirements and general corporate purposes.

However, the company will not receive any proceeds from the offer for sale. The offer for sale proceeds will be received by the selling shareholders.

Important Finances

Summary Of Financial Information

Particulars	For the year (₹ in million)
	31-Mar-20	31-Mar-19	31-Mar-18
Total Assets	40,860.39	35,235.49	29,294.68
Total Revenue	27,724.08	21,297.67	16,716.82
EBITDA	10,874.53	7,918.96	5,838.94
Profit After Tax	7,728.58	4,519.07	3,211.15

Company's Strength:

1. It has extensive and vertically integrated injectable manufacturing capabilities with a consistent regulatory compliance track record.

2. It has diversified B2B led model across markets.

3. It has an experienced management and qualified team is promoted by Shanghai Fosun Pharma.

4. It has a track record of growth and profitability from a diversified revenue base with healthy cash flows.

5. It has an extensive portfolio of complex products supported by internal R&D and regulatory capabilities.

Risk Factors:

1. Gland Pharma is susceptible to product liability claims and associated risks of litigation that could expose it to material liabilities, loss in revenues and increased expenses and thus have a material adverse effect on its business.
2. The injectables pharmaceutical market is highly competitive both globally and domestically.
3. Gland Pharma has significant working capital requirements, if it experiences insufficient cash flows to fund its working capital requirements or if it is unable to provide collateral to obtain credit in sufficient quantities, there may be an adverse effect on its business, cash flows and results of operations.

Our Outlook:

The sentiments are not very positive as the company is backed by Chinese promoters. And also due to the poor performance of Mazgaon Dock, the participation in Gland Pharma issue becomes uncertain.

The company is financially sound and has a robust business structure with good and experienced management but still, we would suggest staying away from this IPO for listing gains.

In case of bad listing, investors can buy the stock for long term.