KNOW THE COMPANY:
Supriya Lifescience Limited, a leading API intermediate manufacturer and supplier, was established in 1987. The company initially started their business operation on significant terms in 1993. The company, in 2004, became the leader on the global level in the production of the chlorpheniramine maleate. Supriya Lifesciences is an innovative new age pharmaceutical company with significant technological support, R&D, and the expertise of highly skilled individuals.
The company’s current product portfolio ranges to 38 products focused on APIs in therapeutic segments, which includes vitamin, antiallergic, antihistamine, analgesic, anaesthetic and anti-asthmatic. The company has a market presence in 86 countries and cater its service through 346 distributors to nearly 1300 clients globally. The company’s manufacturing facility is in Maharashtra that is spread across 23,806 square meters.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the company’s loans, which be availed on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
BASIS OF THE IPO OFFER:
- Supriya Lifescience has a substantial size and position in the market with a considerable market share and a dominant position in its sector of business operation.
- The company holds a highly innovative manufacturing unit with immense potential to develop the API and related technology.
- Supriya Lifesciences operate on a backward integrated business model.
- The company in the past have demonstrated a tremendous financial result which is majorly due to its high margin and low-risk model.
- Supriya has an excellent team of board of directors along with senior management and professionals at high authority and operational levels.
SUPRIYA LIFESCIENCE IPO:
Supriya Lifescience Limited, a pharmaceutical API intermediate manufacturer, has its headquarters in Mumbai. Recently the company got approval from SEBI to float their IPO in the market. The company earlier submitted their DRHP with the SEBI. The company has brought forward the IPO as an IPO that is a combination of an OFS of Rs. The company’s promoter fully brought forward one thousand crore value equity shares, Mr Satish Waman Wagh, along with an issue of fresh equity worth Rs. 200 crores. Currently, the unlisted shares of Supriya Lifesciences are trading at a 91% GMP.
The company stated that the funds raised from the issue of the new issue would be used to fund the working capital requirements along with repaying debts and for general corporate purposes. The company board stated that from the proceeds of new equity Rs. 85.8 crores will be used for their CAPEX plan and Rs. Sixty-seven crores for the repayment of the debts.
| IPO Opening Date | 16 December 2021 |
| IPO Closing Date | 20 December 2021 |
| Issue Type | Book Building Type |
| Face Value | Rs. 2 / Equity share |
| IPO Price | Rs. 265 – Rs. 274 per equity share |
| Market Lot | 1 Lot of 54 shares |
| Minimum Quantity | 54 shares corresponding to 1 lot |
| Maximum Quantity | 702 shares corresponding to 13 lots |
| Minimum Amount | Rs. 14,796 |
| Maximum Quantity | Rs. 192,348 |
| Listing At | BSE, NSE |
| Issue Size | Rs. 1,200 Crores |
| Fresh Issue | Rs. 200 Crores |
| Offer for Sale | Rs. 1,000 Crores |
| Basis of Allotment Date | 23 December 2021 |
| Initiation of Refunds | 24 December 2021 |
| The Credit of Shares to Demat Account | 27 December 2021 |
| IPO Listing Date | 28 December 2021 |
| Basis of Allotment Type | % Of the Allotment in the IPO Offer |
| Qualified Institutional Buyer | 75 |
| Non – Institutional Investor | 15 |
| Retail | 10 |
FINANCIAL TRENDS:
| PARAMETER | MARCH 21 | MARCH 20 | YoY % |
| Earnings Per Share (Rs) | 16.92 | 50.15 | -66.26 |
| CEPS(Rs) | 17.83 | 54.51 | -67.28 |
| DPS(Rs) | 0.54 | 10.00 | -94.59 |
| Book NAV/Share (Rs) | 36.75 | 101.93 | -63.95 |
| Tax Rate (%) | 26.03 | 23.72 | 9.73 |
| Core EBITDA Margin (%) | 39.35 | 27.36 | 43.82 |
| EBIT Margin (%) | 40.34 | 28.67 | 40.70 |
| Pre-Tax Margin (%) | 39.38 | 26.76 | 47.13 |
| PAT Margin (%) | 29.13 | 20.41 | 42.68 |
| Cash Profit Margin (%) | 30.70 | 22.19 | 38.36 |
| ROA (%) | 31.66 | 24.90 | 27.12 |
| ROE (%) | 59.23 | 60.42 | -1.97 |
| ROCE (%) | 60.12 | 49.67 | 21.03 |
| Asset Turnover(x) | 1.09 | 1.22 | -10.90 |
| Sales/Fixed Asset(x) | 3.59 | 3.45 | 4.09 |
| Working Capital/Sales(x) | 3.53 | 8.44 | -58.16 |
| Fixed Capital/Sales(x) | 0.28 | 0.29 | -3.93 |
| Receivable days | 54.19 | 57.07 | -5.04 |
| Inventory Days | 52.35 | 40.70 | 28.61 |
| Payable days | 143.03 | 123.24 | 16.05 |
| EV/Net Sales(x) | 0.11 | 0.31 | -64.98 |
| EV/Core EBITDA(x) | 0.23 | 0.87 | -73.40 |
| EV/EBIT(x) | 0.24 | 0.92 | -73.97 |
| EV/CE(x) | 0.09 | 0.28 | -67.32 |
| M Cap / Sales | 0.00 | 0.00 | 0.00 |
| Net Sales Growth (%) | 23.66 | 12.17 | 94.43 |
| Core EBITDA Growth (%) | 62.77 | 50.43 | 24.47 |
| EBIT Growth (%) | 66.36 | 53.10 | 24.96 |
| PAT Growth (%) | 68.70 | 86.19 | -20.30 |
| EPS Growth (%) | -66.26 | 86.19 | -176.88 |
| Total Debt/Equity(x) | 0.26 | 0.55 | -52.67 |
| Current Ratio(x) | 1.82 | 1.27 | 43.18 |
| Quick Ratio(x) | 1.33 | 0.96 | 38.93 |
| Interest Cover(x) | 42.03 | 15.05 | 179.26 |
| Particulars | For the year with amount ending in crores | |||
| 31-Dec-20 | 31-Mar-20 | 31-Mar-19 | 31-Mar-18 | |
| Total Assets | 3 56.83 | 336.40 | 253.05 | 245.40 |
| Total Revenue | 267.93 | 322.71 | 285.86 | 221.51 |
| Profit After Tax | 76.19 | 73.37 | 39.42 | 8.73 |
STRENGTHS AND GROWTH ASPECTS:
- Supriya Lifescience stated that it plans to expand its manufacturing facility in Lote, Maharashtra. It will help the company boost their production, thus earning them more revenue and an increase in the sales and volume of their product portfolio.
- The company also stated that it would diversify its product portfolio by adding new APIs and entering the new sub-sector.
- Supriya Lifescience is the country’s largest exporter of chlorpheniramine maleate and ketamine hydrochloride. It accounts for 45% and 60% of the total exports worldwide.
- The company has an advanced manufacturing facility and an innovative R&D strategy that made the company attain better financial results.
- The GMP of the IPO is currently trading at a 91 per cent premium on the IPO offer price.
- The company has a perfect financial profile due to improved margins and strong sales in the last three financial years. It also registered a 30% growth in the revenue on a YoY basis and a substantial operating profit margin of around 24.85%.
- Supriya Lifesciences also reduced their debt significantly. As a result, the NCA/Debt ratio of the company is at 52% only.
- The company registered growth with a CAGR of 22%. The country’s growth will further be uplifted with the introduction of the PLI Scheme, Make In India Initiative and Atmanirbhar Campaign.
- Supriya Lifescience has a diversified product portfolio in various categories: anaesthetic, antihistamine, vitamin, analgesic, anti-asthmatic, and antiallergic.
- The company has a strong business association with many top clients worldwide. These clients are on a long-term business agreement with the company.
- Vast distribution network that accounts for 17.40 % revenue from Europe. The Latin American business of the company generates revenue of 19.15%. The company through Asia generates a business revenue of 53% of its total revenue.
WEAKNESS AND THREATS:
- The Pharmaceutical Industry is governed by a set of guidelines, regulations that Supriya Lifescience need to comply with. Supriya Lifescience has a presence in many countries. As a result, it needs to follow USFDA, WHO, ISO Quality Standards and many other regulatory standards for manufacturing in bulk.
- Supriya Lifescience has a moderate scale of operations; it restricts the profitability matrix of the company.
- The operations of the company are highly working capital-intensive operations. It is due to the company’s high inventory level and elongated receivables.
- The company is vulnerable to any production, quality control issue that can have a detrimental impact on the company’s reputation. It could lead to a severe impact on the company on the financial and operational front.
- Supriya life science’s promoter, director and the company itself face a trial under a legal procedure.
- The majority of the revenue is from their core products only, even if it has a diversified product portfolio.
- Supriya Lifescience is engaged in the business with many small clients. These clients’ accounts for nearly 87% of their business revenue.
- The company will be severely impacted if there is any delay in the company’s operation, which can lead to the disruption and failure of the optimal capacity of their manufacturing plant.
- Supriya Lifescience relies on third-party suppliers and vendors for the raw materials, logistics support, supply chain network and inventory management.
- The company’s lenders have put a restriction limit on the financial agreements of the company.
- The company is engaged in a highly competitive business where it faces a stiff challenge from many organized and unorganized players in the market.
- Supriya Lifesciences, being engaged in API formulation, needs to advance regularly in the technology advancement field, an R&D facility set up, and a team of highly skilled professionals.
- The company is also vulnerable to the pricing, availability, supply chain network of the raw material for the production of its final product.
- COVID-19 has significantly dropped the company’s financial results due to its cash flows, operating margins, and other financial parameters.
PROMOTERS:
- Satish Waman Wagh
| Pre-Issue Share Holding | 99.26% |
| Post Issue Share Holding |
CONTACT DETAILS:
Supriya Lifescience Limited
207/208, Udyog Bhavan, Sonawala Road, Goregaon – East,
Mumbai – 400063, Maharashtra, India;
Tel: +91-22-40332727
E-mail: cs@supriyalifescience.com
Website: www.supriyalifescience.com
REGISTRAR:
Link Intime India Private Limited
C-101, 1st Floor, 247 Park, Lal Bahadur Shastri Marg,
Vikhroli (West) Mumbai 400 083 Maharashtra
Tel: (+91 22) 4918 6200
E-mail: supriyalife.ipo@linkintime.co.in
Website: www.linkintime.co.in
LEAD MANAGER(S):
- ICICI Securities Limited
- Axis Capital Limited
