Supriya Lifesciences IPO - 7 Thing you Need to Know

Supriya Lifesciences, a manufacturer of active pharma ingredients (APIs) has filed the draft red herring prospectus (DRHP) with SEBI for its proposed IPO. The company is planning to raise Rs.1,200 crore from the primary market, which will include a fresh issue of Rs.200 crore and an offer for sale of Rs.1,000 crore. Here are 7 thing you need to know about the forthcoming Supriya Lifesciences IPO

1.  The company has already filed the draft red herring prospectus or DRHP with SEBI and the regulatory approval has already been received by the company. The next steps are to file the RHP (red herring prospectus) with the ROC before finalizing the terms of the issue like dates, price band etc. 

2.  The company will have a face value of Rs.2 per share. It will come out with a fresh issue of Rs.200 crore and an offer of sale (OFS) by existing shareholders up to Rs.1,000 crore held by its promoter Satish Waman Wagh. 

3.  Out of the total issue of Rs.1,200 crore, only Rs.200 crore will come into the company as fresh funds. The company will use around Rs.85 crore for its current capital expenditure program. Supriya Lifesciences plans to expand its existing manufacturing facilities at its main plant at Lote, Maharashtra. In addition, the company  will also use part of the funds to invest in existing manufacturing technologies to build new capabilities in order to support production. It will also use around Rs.60 crore of funds for loan repayments.

4.  The company is a profit making company. For FY20, Supriya Lifesciences had reported total revenues of Rs.323 and a healthy net profit of Rs.73.37 crore. That represents a net margin of almost 23% for the fiscal year. On a yoy basis, the revenues were up 12% while profits almost doubled. For the nine months ended Dec-20, the company has reported net profits of Rs.76 crore highlighting the growth on an annual basis. 

5.  The company has reserved 75% of the issue size for qualified institutional buyers or QIBs as it expects a strong institutional appetite for the IPO. The allocation to the non-institutional investors or the HNI investors will be 15% while the retail investors will be left with just 10% allocation. These are the retail bidders putting bids of up to Rs.200,000. Hence higher subscription on retail portion could be on the cards.

6.  Supriya Lifesciences is not only a key manufacturer and supplier of active pharma ingredients in India with a strong R&D focus, but also a key player in certain niche segments. In fact, as of Mar-21, Supriya Lifesciences had niche offerings of 39 APIs focused on diverse therapeutic segments. These segments include inter alia antihistamine, analgesic, anaesthetic, vitamin, anti-asthmatic and anti-allergic products.

7.  Supriya Lifesciences also has a very strong export franchise and it has been the largest exporter of chlorpheniramine maleate and ketamine hydrochloride from India between FY2017 and FY2020. In addition, Supriya Lifesciences is also among the largest exporters of salbutamol sulfate from the country.

While we need to await the finer pricing and valuation details, the company business model does look robust.