Gland Pharma makes a stellar stock market debut1 min read . Updated: 20 Nov 2020, 11:24 PM IST
The China-backed firm saw its shares closing over 21% above issue price of ₹1,500
Gland Pharma Ltd, the first Indian company with a Chinese promoter to go public, made a robust debut on the stock markets on Friday, with its shares closing over 21% above issue price.
After opening at ₹1,701, a 14% premium to the issue price of ₹1,500, the stock rose further to close at ₹1,820.45, a 21.36% gain from the issue price.
China’s Shanghai Fosun Pharma acquired a 74% stake in Gland Pharma in 2017 for more than $1.1 billion, in the largest acquisition of an Indian company by a Chinese firm.
Gland Pharma’s ₹6,480 crore initial public offering (IPO), the biggest in India’s pharmaceutical sector, was open for subscription from 9 to 11 November with a price band of ₹1,490-1,500. The issue was subscribed 2.06 times. Proceeds from the issue will be used to fund incremental working capital and capital expenditure requirements as well as for general corporate purposes.
“With benefits of being an out-and-out integrated injectable/ophthal manufacturer and B2B functionary combined, Gland offers a compelling proposition with its unblemished regulatory track record and customer stickiness besides long-standing manufacturing pedigree, justifying premium valuation," wrote ICICI Securities in a note ahead of the IPO.
Hyderabad-based Gland Pharma is one of the fastest-growing generic injectables focused companies, operating in more than 60 countries. The company generates 97% of its revenues from business-to-business (B2B) model through IP-led, tech transfer and contract manufacturing.
Gland Pharma’s revenue grew backed by expanding operating margin of 39.5%, 37.2%, 34.9% in FY2018, FY2019 and FY2020, respectively largely by its vertically integrated injectables manufacturing capabilities.
“On valuation front, Gland Pharma is valued at a price to earnings of 18.5 times FY21 annualized earnings per share (EPS)," said Nirvi Ashar, analyst, Religare Broking.
Gland Pharma has seven manufacturing facilities in India, comprising four finished formulations facilities with a total of 22 production lines and three active pharmaceutical ingredient (API) facilities. As of 31 March 2020, it has a manufacturing capacity for finished formulations of 755 million units per annum. As of 30 June, the company along with its partners has 267 abbreviated new drug application (ANDA) filings in the US, of which 215 have been approved and 52 are pending approval.