Supriya Lifescience share price begin trading 55% above IPO price on its debut

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Supriya Lifescience’s IPO, which raised Rs 700 crore, was subscribed 71.51 times earlier this month.

Supriya Lifescience stock soared to greater heights on the stock exchanges today, owing to the strong market mood. The active pharmaceutical ingredients (API) manufacturer’s stock opened at Rs 425 per share, up 55.11 percent or Rs 151 from the price band’s upper limit of Rs 274 per share.

Supriya Lifescience’s Rs 700 crore public offering included both new equity shares and an offer for sale (OFS) by existing shareholders. With a focus on research and development, the company is a manufacturer and provider of APIs. At the time of its initial public offering, Supriya Lifescience had a market value of Rs 3,420 crore.

Non-Institutional Investors (NII) bid 161.22 times for their stake of the Rs 700 crore Supriya Lifescience IPO, which was subscribed 71.51 times earlier this month. The retail portion received 56 bids, while the QIB portion received 31.83 bids. The price range for the shares was defined at Rs 265-274 per share.

Promoter shareholding in the company will drop to 68.24 percent after the public issue, down from 99.98 percent before the offering. As a result, the public shareholding will rise to 31.76 percent, up from 0.02 percent prior to the IPO.

“Supriya owns 38 APIs focused on diverse therapeutic segments along with being the largest exporter of Chlorpheniramine Maleate and Ketamine Hydrochloride from India. At the upper price band, it is valued at ~13.3x EV/EBITDA and ~17.8x P/E for FY21,” said analysts at ICICI Direct.

The IPO was not given a rating by the brokerage firm. The funds raised from the IPO will be utilized to fund capital expenditures as well as the repayment and prepayment, in full or in part, of certain debts.

Religare Broking analysts valued the issue at 17x FY22 post-issue annualised EPS. They went on to say that they had a good outlook on the company in the long run. 

“Supriya stands to benefit from the positive industry growth trends given that it has a significant scale with a leadership position across key & niche products. Its backward integration of API ensures a steady supply of intermediates. Moreover, it has geographically diversified revenues with a global presence across 86 countries,” they added.

Between the financial year 2018 and the previous fiscal year, Supriya Lifescience’s net profit increased steadily. Between the financial years 2018 and 2021, Choice Broking’s net profit grew at a CAGR of 142.1 percent, according to the company.

The offer required a P/E multiple of 17.8x (to its FY21 earnings of Rs 15.4), according to Choice Broking, which is lower than the peer average of 31.4x. On the subject, the brokerage company had a subscribe rating.

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