Sai Life Sciences Ltd’s initial public offering (IPO) is set to close today, December 13, 2024, marking the last opportunity for investors to participate in this much-anticipated public issue. Launched on December 11, the IPO has already been fully subscribed, showcasing strong investor interest. Sai Life Sciences aims to raise ₹3,042.62 crore through this book-built issue, with shares priced between ₹522 and ₹549 per share.
Let’s dive deeper into the subscription status, grey market premium (GMP), company details, and whether this IPO is a worthwhile investment.
Subscription Status
As of December 12, the second day of the bidding process, Sai Life Sciences’ IPO was subscribed 1.25 times. A total of 4.86 crore equity shares were bid for, against the 3.88 crore shares on offer. The breakdown of subscriptions across investor categories is as follows:
- Retail Investors: Subscribed 42%
- Non-Institutional Investors (NIIs): Subscribed 59%
- Qualified Institutional Buyers (QIBs): Subscribed 3.32 times
This strong QIB interest indicates institutional confidence in the company’s long-term prospects.
Grey Market Premium (GMP)
In the unlisted market, Sai Life Sciences shares have exhibited a muted trend. The GMP today stands at ₹18 per share, suggesting a marginal premium of 3% over the upper IPO price of ₹549. At a GMP of ₹567 apiece, the subdued premium reflects cautious sentiment among grey market participants, signaling limited speculative excitement.
Company Overview
Sai Life Sciences is one of India’s leading Contract Research, Development, and Manufacturing Organizations (CRDMOs). The company specializes in small-molecule new chemical entities and provides end-to-end solutions for biotech firms and global pharmaceutical companies. Its integrated operations span the discovery, drug development, and commercial manufacturing value chain.
Despite being slightly overvalued compared to peers, Sai Life Sciences has delivered an impressive financial performance:
- Revenue CAGR (FY22–FY24): 29.8%
- EBITDA CAGR (FY22–FY24): 53.4%
- PAT CAGR (FY22–FY24): 264.7%
The IPO proceeds will be used to repay outstanding borrowings, which is expected to save ₹56 crore in annual finance costs, thereby improving profitability.
IPO Valuation and Financial Metrics
The Sai Life Sciences IPO is priced at a price-to-earnings (P/E) ratio of 137.9x and an EV/EBITDA multiple of 38.6x based on FY24 projections and the upper price band. These metrics highlight that the IPO is priced at a premium compared to its listed peers. However, analysts believe the company’s strong performance and promising industry trends justify the valuation.
Expert Recommendations
Analysts at SBI Securities suggest subscribing to the IPO for a long-term investment horizon, given the company’s solid financials and growth potential. Meanwhile, BP Equities has assigned a “Subscribe” rating, citing the company’s favorable positioning in the CRDMO market and its impressive earnings growth.
Key IPO Details
- IPO Price Band: ₹522 to ₹549 per share
- Issue Size: ₹3,042.62 crore
- Fresh Issue: 1.73 crore shares worth ₹950 crore
- Offer-for-Sale (OFS): 3.81 crore shares worth ₹2,092.62 crore
- Purpose of IPO:
- Repayment or prepayment of borrowings
- General corporate purposes
- IPO Timeline:
- Subscription Period: December 11–December 13, 2024
- Allotment Finalization: December 16, 2024
- Listing Date: December 18, 2024
- Listing Exchanges: BSE and NSE
Industry Trends and Outlook
The CRDMO sector is experiencing robust growth globally, driven by increasing demand for outsourcing in drug discovery and manufacturing. India, with its cost-effective manufacturing capabilities and skilled workforce, is well-positioned to benefit from this trend. Sai Life Sciences, as a leading player in this space, is poised to capitalize on these opportunities.
Should You Invest in Sai Life Sciences IPO?
Sai Life Sciences offers a compelling growth story backed by a strong financial track record and a robust market presence. While its valuation appears steep, its earnings growth and market position support a long-term investment case.
However, the muted grey market response and high valuation multiples suggest limited short-term upside. Retail investors should carefully assess their risk tolerance and investment goals before making a decision. For those with a medium- to long-term horizon, this IPO could be a promising addition to their portfolio.
Conclusion
Sai Life Sciences IPO presents a unique opportunity to invest in a fast-growing CRDMO player with a solid industry reputation. Despite high valuations, the company’s growth potential, debt repayment plans, and strong market trends make it a worthwhile consideration for long-term investors.
As always, consult with certified financial experts and evaluate your investment objectives before subscribing to this IPO.
Disclaimer: This article is for informational purposes only. The opinions expressed are based on available data and expert insights. Investors should conduct their research or seek professional advice before making any financial decisions.