Glenmark Life Sciences IPO- Fundamental Analysis
Financial Highlights of Glenmark Life Sciences IPO
- Increase in sales attributed to a rise of 21.73% in the total revenues (Rs 1885.98 crore) for FY21 as against Rs 1549.31 crore for FY20.
- The Issuer posted PAT of Rs 351.58 crore in FY21; it increased by 12.3% from PAT of Rs 313.10 crore for FY20.
- Profitability margins are robust throughout all three fiscals. The margins are plotted in the chart below. Net margin has fallen slightly to 18.64% in FY21 from 20% during the last two fiscals.
- The debt to equity ratio is 1.27x as on 31st March 2021. Return on net worth is 46.71% for fiscal 2021.
- Net cash generated from operations was Rs 388.11crore, Rs 195.01 crore, and Rs 10.35 crore for FY 21, F20, and FY19 respectively.
Business Review of Glenmark Life Sciences
Valuation of Glenmark Life Sciences IPO
The Issue is priced at 22.08x with an EPS of 32.61(as of 31st Mar 21) calculated at the upper price band of Rs 720 per share. The Issue appears to be reasonably priced when compared to the average sector P/E of 36.74x.
P/BV is 10.31x at NAV of Rs 69.82 per share as on 31st Mar 21.
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| Valuation Parameters (fig as on 31st March 2021) | EPS | P/E | NAV | P/BV | Average sector P/E |
| 32.61 | 22.08 | 69.82 | 10.31 | 36.74 |
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Profitability margins chart
Conclusion
Glenmark Life Sciences has strengthened its business positioning with widespread geographic reach and strong service offerings. It has significant revenue from the regulated markets and a high rate of customer retention.
The Issuer has a good track record of financial performance with a strong financial profile with profitable operations. Geographic expansion and growth in complex API and CDMO business are the key growth opportunities. Glenmark Life has plans to increase its existing production capacities in the future as highlighted in the business review of Glenmark Life Sciences. Further, the Issue is reasonably priced in terms of price to its earnings ratio when compared to its peers. Hence, investors may subscribe to the IPO.
Peers of Glenmark Life Sciences
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| Peers | Total Income (FY21 in INR crore) | EPS | P/E | RoNW |
| Divis Lab | 7031.96 | 74.75 | 63.65 | 21.35% |
| Lauras Lab | 4835.9 | 18.36 | 36.59 | 37.87% |
| Shilpa Medicare | 931.3 | 18.13 | 33.37 | 9.99% |
| Aarti Drugs | 2159.3 | 30.09 | 24.28 | 30.70% |
| Solara Active pharma | 1645.7 | 69 | 25.83 | 13.93% |
| Glenmark Life Sciences | 1886.0 | 32.61 | – | 46.71% |
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