Concord Biotech lists at 21% premium, beats grey market expectations

• Concord Biotech stock listed at ₹900 on bourses, that’s ₹159 higher than the IPO price of ₹741.
• The market cap of the company is at ₹9,415 crore, as per BSE.
• The issue is completely an offer for sale where none of the proceeds will go to the company.
  

Ahmedabad-based pharma company Concord Biotech made its D-street debut at a 21% premium on Friday, beating grey market expectations. The stock listed at ₹900 on bourses, that’s ₹159 higher than the IPO price of ₹741.

The grey market was expecting it to provide 15% listing gains. The grey market is the unofficial market wherein stocks are traded ahead of their market debut.

The market cap of the company is at ₹9,415 crore, as per BSE.

The ₹1,550 crore IPO was subscribed around 25 times on the last day of the issue. While the non-institutional investor portion was subscribed almost 17 times, the retail portion was subscribed 3.7 times. Qualified institutional investor (QIB) portion was subscribed 67.6 times.

Source: BSE

Big bull Rakesh Jhunjhunwala’s company RARE Enterprises owns 24.09% shareholding in the company.

Concord Biotech has three manufacturing facilities and two dedicated R&D units, all located in Gujarat. It manufactures bio-pharmaceutical APIs through fermentation and semi-synthetic processes, with a focus on therapeutic areas such as immunosuppressants, oncology, and anti-infectives.

It has an installed fermentation capacity of 1,250 m3 as of March 31, 2023. It exports its bio-pharmaceutical APIs and formulations to over 70 countries, including the United States, Europe and Japan. It also supplies APIs in the domestic market.

According to a Frost & Sullivan Report, the company has a market share of over 20% by volume in fermentation-based API products, including mupirocin, sirolimus, tacrolimus, mycophenolate sodium, and cyclosporine as of 2022.

Some of its listed peers include Divi’s Laboratories, Suven Pharmaceuticals, Laurus Labs and Shilpa Medicare.

Financials & Risk factors

The company is subject to risks that come with being in the pharmaceutical sector like regulations both domestic and international; impact of exchange rate fluctuations; pricing pressures and counterfeiting. Apart from that it has listed various risks associated with the company like dependence on third-party suppliers for certain raw materials.

While none of our contracts with suppliers were not renewed or cancelled in the past three financial years, the supply of raw materials from third-party suppliers may be disrupted due to various factors outside of our control, the company said, adding that they are also highly dependent on raw material imports from China.