Sai Parenteral’s IPO Day 3: The initial public offering (IPO) of Sai Parenteral’s, a diversified pharmaceutical formulations company, which opened for subscription on March 24, will close today, March 26. By the end of Day 2, the issue remained weakly subscribed.
The IPO has fixed a price band of ₹372 to ₹392 per share. The allotment status for the issue is expected to be finalised on March 30, while the tentative listing date has been set as April 2.
Sai Parenteral’s IPO GMP today
Investor sentiment towards the IPO remained muted, as Sai Parenteral’s grey market premium (GMP) stood at ₹0 on March 26. This suggested that the stock was likely to debut at ₹392, the same as the upper end of the IPO price band.
Grey market premium refers to the amount investors are willing to pay over and above the issue price in the unofficial market.
Sai Parenteral’s IPO subscription status
The issue has received a weak response so far. By the end of Day 2, the IPO was subscribed 0.42 times, with bids received for 30.82 lakh shares against 75.22 lakh shares on offer, according to exchange data. The subscription for Day 3 will start at 10 am.
The retail portion was subscribed 0.05 times, while the non-institutional investor (NII) category was subscribed 1.05 times. The qualified institutional buyer (QIB) portion was booked 0.60 times.
Sai Parenteral’s IPO: Should you subscribe?
Brokerages have offered mixed views on the IPO, with some seeing long-term potential while others remain cautious about valuations.
Anand Rathi has assigned a “Subscribe-Long Term” rating to the issue.
“Sai Parenterals Ltd is valued at ~10.6x to price/sales on FY25 sales (at the upper band), which is valued fairly in relation to its competitors. Considering the company’s consistent track record & superior financial metrics, the valuation is fully priced in & is rated ‘Subscribe-Long Term’.”
Swastika Investmart, however, has raised concerns over the company’s valuation. According to the brokerage, Sai Parenteral’s is valued at a pre-IPO P/E of 72.19x and has a RoCE of 9.28%, which appears stretched. It compared this with peers such as Innova Captab, which trades at 32.45x, and Gland Pharma, which trades at 44.71x, both of which have stronger scale and earnings.
“The business fundamentals and growth trajectory are solid, but the P/E of 72x is expensive for a company of this size and RoCE. The company entered export markets in FY2023 and currently supplies to Australia, New Zealand, Southeast Asia, the Middle East and Africa, with WHO-GMP and TGA-accredited facilities, which supports a long-term growth thesis.”
Swastika Investmart has advised investors looking for short-term or listing gains to stay away from the issue, noting that the risk-reward remains unfavourable and better opportunities are available in the pharma sector at more reasonable valuations.
Sai Parenteral’s IPO details
The ₹409 crore IPO is a combination of a fresh issue of 0.73 crore shares aggregating to ₹285 crore and an offer for sale (OFS) of 0.32 crore shares aggregating to ₹123.79 crore. Ahead of the issue opening, the company had already raised ₹122.6 crore from anchor investors.
The company plans to use the proceeds from the fresh issue for multiple purposes. Out of the total, ₹111 crore has been earmarked for capacity expansion and upgradation of manufacturing facilities, ₹18 crore for the establishment of a new R&D centre, and ₹14.30 crore for debt repayment. The remaining funds will be used for general corporate purposes.
Investors can apply for the IPO in lots of 38 shares. At the upper price band, a retail investor would need to invest ₹14,896 for one lot.
The issue is being offered through the book-building process, with not more than 50% of the net offer reserved for QIBs, while not more than 15% and 35% are allocated to NIIs and retail investors, respectively.
Arihant Capital Markets is the book-running lead manager to the issue, while Bigshare Services is the registrar.
About Sai Parenteral’s
Sai Parenteral’s operates as a diversified pharmaceutical formulations player with capabilities spanning research, development, and manufacturing. The company is active in the branded generic formulations segment and also offers contract development and manufacturing organisation (CDMO) products and services for both domestic and international markets.
Its product portfolio covers a wide range of therapeutic areas, including cardiovascular, neuropsychiatry, anti-diabetic, respiratory health, antibiotics, gastroenterology, vitamins, minerals, and supplements (VMS), analgesics, and dermatology. It also offers multiple dosage forms such as injectables, tablets, capsules, liquid orals, and ointments.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
