 "pre-IPO investors")
Late investor Rakesh Jhunjhunwala-backed Concord Biotech’s (CBL) Rs 1,550 crore-initial public offer (IPO) will open for subscription today and close on August 7.
The issue is entirety an offer for sale, wherein investor Helix Investment Holdings is selling its 20 per cent stake. The price band is fixed at Rs 705-741 a share.
Ahead of the IPO, the company has raised Rs 465 crore via marquee anchor investors such as the government of Singapore, Abu Dhabi Investment Authority, Government Pension Fund Global, and HSBC MF, among others.
Rakesh Jhunjhunwala owns a 20.49 per cent shareholding in CBL through his asset management firm RARE Enterprises.
The company is among the leading global makers of select fermentation-based APIs (F-APIs) across immunosuppressants and oncology with a market share of over 20 per cent by volume in 2021.
CBL has a global footprint with customers across over 70 countries. As of FY23, it had 23 APIs (89 per cent of revenue), which it aims to increase further, especially in anti-infective, oncology segments.
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Fermentation is a challenging process and complex technical capabilities, difficulty in scaling up operations and the substantial capital investment required have resulted in significant barriers to entry into the fermentation-based API space, the company said in its DRHP.
The company said it aims to continue to grow its immunosuppressant API portfolio, which will remain one of the key contributors to its API business in the near future.
Two of its top ten customers for APIs include Intas Pharma and Glenmark Pharma. It offers APIs under the CDMO B2B model to pharma companies globally.
CBL also forayed into the formulations segment in 2016. It makes and offers immunosuppressant formulations and nephrology and anti-infectives under its own brands in India via its sales force. These are sold across emerging markets and the US, primarily through CDMO contracts.
What do brokerages suggest:
Motilal Oswal | Subscribe
We like CBL given its complex product portfolio, presence in niche space, strong client relationship and high entry barriers. The issue is valued at 32x P/E in line with the peer group. CBL could also benefit from the industry tailwinds given its PLI approval in place.
Its revenue has grown at a CAGR of 18 per cent over FY21-23 with a robust operating margin of 40 per cent. Its return ratios are healthy with return on equity/return on capital employed of 20 per cent/19 per cent.
Reliance Securities | Subscribe
CBL has an established presence in its therapeutic areas. In view of the strong global footprint, diversified products portfolio, robust in-house R&D capabilities and experienced management team, we recommend subscribing to the issue.
Ashika Research | Unrated
The company plans to grow by expanding its geographic reach, launching newer dosage forms, and expanding its formulation portfolio. The existing formulations are primarily oral solids and oral liquids. It is expanding the formulation manufacturing facility to include a new section for injectables.
The injectable facility will manufacture delivery forms such as liquid vials and lyophilized vials, dry powder injections and sterile powder lyophilization. Its PE rating of 32.3x compares against Suven Pharma’s 30.5x, Laurus Labs’ 33.6x and Divi’s 53.7x.
