IPO Note - Supriya Lifescience Ltd By Choice Broking
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Salient features of the IPO:
* Mumbai-based active pharmaceuticals ingredients (API) manufacturer, Supriya Lifescience Ltd. (SLL), is coming up with an IPO to raise Rs. 700cr, which opens on 16th Dec. and closes on 20th Dec. 2021. The price band is Rs. 265 - 274 per share.
* The issue is a combination of fresh and OFS. The company will not receive any proceeds from the OFS part of the issue. From the fresh issue net proceeds, Rs. 92.3cr will be used to fund the proposed expansion of the manufacturing facility; Rs. 60cr will be utilized for the repayment/pre-payment of certain borrowings availed by the company.
Key competitive strengths:
* Significant scale with leadership position across key & niche products
* Backward integrated business model
* Geographically diversified revenues with a global presence across 86 countries
* Advanced manufacturing and research and development capabilities
* Consistent strong financial performance due to de-risked business model
* Experienced senior management team and qualified operational personnel
Risk and concerns:
* Unfavorable government policies and regulations
* Delay in new product-launch
* Unfavorable product-mix
* Inability to maintain the profitability
* Unfavorable forex movements
* Product revenue concentration risk
* Competition
Below are the key highlights of the company:
SLL is one of the key Indian manufacturers and suppliers of APIs, with a focus on R&D. The company had niche product offerings of 38 APIs – focused on diverse therapeutic segments such as anti-histamine, analgesic, anaesthetic, vitamin, anti-asthmatic and anti-allergic. Its products are registered with various international regulatory authorities such as USFDA, EDQM, NMPA, KFDA, PMDA, TGA and Taiwan FDA. As of 31st Oct. 2021, the company has filed 14 active DMFs with USFDA and eight active CEPs with EDQM for API products in various therapeutic areas.
It has consistently been the largest exporter of Chlorpheniramine Maleate and Ketamine Hydrochloride, contributing to 45-50% and 60- 65%, respectively, of the API exports from India, between FY17-21. In volume terms, the company is among the largest exporters of Salbutamol Sulphate in India, contributing 31% of the API exports in FY21. Further, it also contributed to 25-30% of exports of Vitamin B2 and its salts during FY17-21.
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