Introduction:
After the blockbuster July, August 2023 will be another busy month for IPO investors. Several Initial Public Offerings (IPOs) are about to hit the streets in the first week. One is the Concord Biotech IPO, backed by Late ace investor Rakesh Jhunjhunwala.
Concord Biotech IPO is due to open for public subscription on 4 August 2023, and its shares are already demanding a high premium in the grey market. But is this IPO safe for investors looking to invest long-term or even for listing gains? Continue reading to know crucial details of the IPO, including its issue size, price band, listing date, etc.
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About Concord Biotech IPO:
Concord Biotech Limited is an Indian Research and Development (R&D) based biopharma company with a worldwide presence. It is of the leading global producers of Active Pharmaceutical Ingredients (APIs) and formulations through fermentation and semi-synthetic processes for usage across therapeutic areas of immunosuppressants, oncology, nephrology, and anti-infectives.
In 2022, Concord Biotech had a market share of more than 20% in terms of the total volume of all identified fermentation-based API products. As of 31 March 2023, the company was manufacturing 23 APIs and 77 approved formulations. Its products were supplied to over 200 clients across 70 countries, including the United States of America (USA), Japan, Africa, and Europe. It also has a strong presence in the domestic market.
Strengths of Concord Biotech:
- One of the leading companies in the world with an established market share across the complex fermentation value chain
- Enjoys global recognition for the production of immunosuppressant APIs
- Robust manufacturing facilities in Gujarat with state-of-the-art infrastructure and a consistent track record of regulatory compliance
- Boasts a strong and global client base and long-standing relationships with key clients
- Strong research and development team with a proven track record in terms of both efficiency and innovation
- Backed by marquee investors like Late Mr. Rakesh Jhunjhunwala
- Highly-qualified and experienced promoters and management team
Weakness Of Concord Biotech:
- For FY 2023, 44% of the company’s revenue came from the top 10 clients. Any sourness in the relationship with them may impact the business
- Certain products contribute significantly towards the company’s revenue. Hence, there’s a need for greater diversification
- Business is subject to extensive government regulations
- As the company collects a major portion of its revenue from international clients, fluctuations in the exchange rate may influence profit margins
- There are certain pending legal proceedings involving the company
Financial Snapshot of Concord Biotech:
The table below depicts the company’s financials as per the Draft Red Herring Prospectus (DRHP) it has filed with the Securities and Exchange Board of India (SEBI):
*Amount in Crores
Source – DRHP as on 28 July 2023
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The following are the takeaways from the financials of Concord Biotech Ltd.:
- The revenues have grown steadily in the last two financial years as have the profits
- The borrowings of the company have reduced considerably in the last three years
- The company has an impressive return on equity, justifying somewhat higher valuations
The Details of the IPO:
Concord Biotech IPO consists of a pure offer-for-sale of up to 20,925,652 equity shares being offloaded by Helix Investment Holdings Pte Ltd. The issue is worth Rs. 1,551 crores at its upper price band. It opens for public subscription on 4 August and closes on 8 August 2023. As a retail investor, you can bid for a minimum of 20 shares within the price band of Rs. 705 to Rs. 714 per share.
50% of the offer is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and the remaining 35% is for retail investors.
The table below summarises the essential details of the IPO:
Should you subscribe or not?
As of 31 July 2023, Concord Biotech IPO is commanding a healthy grey market premium of Rs. 325 per share. It indicates listing gains of around 50%. However, it should not be the only reason to subscribe to this IPO. An impressive roster of investors, a strong business model, and a global customer base are other factors you can consider if investing for the long term.
If you need a Demat accountto invest in this IPO, you can open it for free with Motilal Oswal.
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