Gland Pharma :- The Biggest Pharma IPO in India Till Date

ABOUT GLAND PHARMA

Gland pharma is an INDIAN subsidiary for the Chinese brand FOSUN Pharmaceutical. It was started in 1978 in Hyderabad. It has its business in more than 60 countries including USA, Europe, Australia etc. It is involved into manufacturing and marketing of sterile preparations which are injected or infused into the circulation system of humans or animals.

Gland Pharmaceuticals has in all 7 manufacturing plants in India. Out of them 4 are involved in finished products formulation and 3 are involved in Active Pharmaceutical Ingredient (API) facilities. It has a B2B model with major customers. The B2B model in India is complemented by the B2C model which gives its networking and sales a great strength.

Also, the FPI limit is capped at 74% in this company and it is launching the IPO when it has a P.E. level of approximate 30x for the financial year 19-20. Also in all it has 267 ANDA filings and 62% of it’s revenue has been derived from the USA.

GLAND PHARMA IPO DETAILS

The IPO is set to raise across Rs. 6500 crore. The IPO is issued by book building method. The issue size is 4,31,96,968 equity shares (Rs. 6500 crore). The face value is set at Re. 1. Gland Pharma limited share price has been set at Rs. 1490 – Rs. 1500. The lot size is set at 10 shares hence the investors would be able to invest in multiple of 10 shares.

Out of the entire share size 0.8% (83,33,333 shares) is fresh shares (Rs. 1250 crore) and 3.48 crore shares are for OFS (Rs. 5229 crore). 35% shares are allotted for retail investors. Before the launch of IPO the company was able to raise Rs. 1944 crore from anchor investors at a price of Rs. 1500. The list of anchor investors comprises Govt. of Singapore, Goldman Sachs, Nomura, SBI Mutual Fund, Axis Mutual Fund and Morgan Stanley.

FINANCIAL HIGHLIGHTS FOR LAST THREE YEARS :-

COMPONENT	2017-18	2018-19	2019-20
GLAND PHARMA REVENUE (Rs. million)	16229	20442	26332
GLAND PHARMA EBITDA (Rs. million)	5839	7919	10946
GLAND PHARMA PAT (Rs. million)	3211	4519	7729
GLAND PHARMA NET WORTH (Rs. million)	24104	28621	36462
GLAND PHARMA RETURN ON CAPITAL EMPLOYED	12.59 %	15.11%	20.74%
GLAND PHARMA RETURN ON NET WORTH	13.32%	15.79%	21.20%
GLAND PHARMA EPS. (IN RS ONLY)	20.72	29.16	49.88

IMPORTANT DATES

The IPO is set to be launched today (9th November) and will be open till 11th November. The IPO is going to be listed on both the Indian stock exchanges (NSE and BSE). Other important dates are :-

17th November – Allotment finalization date

18TH November – Initiation of refunds

19th November – Credit of Shares to D-mat Account

20th November – IPO Listing

PURPOSE OF RAISING MONEY THROUGH IPO

Gland pharma is planning to use the raised capital for the following purposes:-

Funding the working capital requirements
Funding the capital expenditure requirements
General corporate purposes

RISK FACTORS

It is induced into the business of the injectable manufacturing industry and it takes a lot of time for the approvals of such products. Hence if there is any delay in such approvals it can cause a hit to the financial position and cash flows of the company. Also a major part of its sale is based on these injectable products. Hence a delay in manufacturing would lead to delay in sales and hence a decrease in quarterly profits.
3 out of 7 plants of India are based on API so if there is an interruption in that due to licensing or quality or production, then sales of its products would be delayed.
It has a significant working capital requirement and this is one of the reasons why the IPO is planned. In future if it requires additional capital and is not able to provide LOC or guarantees from banks then it may have an adverse effect on its business.

Jatin