IPO Note - Supriya Lifesciences Ltd By Nirmal Bang
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BACKGROUND
Supriya Lifesciences Ltd (SLL) is one of the key Indian manufacturers and suppliers of active pharmaceuticals ingredients (“APIs”), with a focus on research and development. As of October 31, 2021, the company had niche product offerings of 38 APIs focused on diverse therapeutic segments such as antihistamine, analgesic, anaesthetic, vitamin, antiasthmatic and anti-allergic. It is consistently been the largest exporter of Chlorpheniramine Maleate and Ketamine Hydrochloride from India, contributing to 45-50% and 60-65%, respectively, of the API exports from India, between FY17 and FY21. SLL is among the largest exporters of Salbutamol Sulphate in India contributing to 31% of the API exports from India in FY21 in volume terms. Company’s products were exported to 86 countries in FY21. The business operations are supported by a modern manufacturing facility located in Parshuram Lote, Maharashtra having reactor capacity of 547 KL/ day. In addition, the Company has acquired a plot of land, admeasuring 12,551 sq.mt, near the present manufacturing facility, wherein the Company intends to expand its manufacturing infrastructure. The manufacturing facility has received approvals from USFDA, EDQM TGA-Australia, KFDA-Korea, PMDA-Japan, NMPA (previously known as SFDA)- China, Health Canada.
Objects of the Issue
The issue of Rs 700 cr includes offer for sale of Rs 500 cr and Rs200 cr fresh issue which would be utilized to fund capex, repayment of borrowings
Investment Rationale
* Leadership Position Across Key and Niche Products
* Backward Integrated
* Geographically Diversified Revenues
* Quality Manufacturing Capabilities
* Consistent strong financial performance
Valuation and Recommendation
The company has grown revenues at CAGR of 22% between FY18-21 inline with industry average however EBITDA has grown at 97% during the same period, double the industry average. SLL has strong return ratios. We have compared Supriya with almost all the leading listed API players and found it quite attractive. Given the strong leadership in selected niche regions along with the healthy financials and attractive valuations we recommend “Subscribe”
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