- QIBs and non-institutional investors showed good interest in the issue on day 3.
- The retail portion was subscribed 3.7 times, as per BSE data.
- The issue is entirely an OFS up to 20.92 million shares by Helix Investment Holdings.
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.
The price band for the issue is fixed at ₹705-741 per equity share for its maiden public offer. The company had intended to raise anywhere between ₹1,475 crore to ₹1,550 crore from the offer.
About the issue
The issue is entirely an offer for sale (OFS) up to 20.92 million shares by Helix Investment Holdings Pte. Limited. Helix Investment Holdings holds a 20% stake in the company. It is backed by Quadria Capital Fund, a PE fund.
Big bull Rakesh Jhunjhunwala’s company RARE Enterprises owns 24.09% shareholding in the company.
Kotak Mahindra Capital, Citigroup Global Markets, and Jefferies India are the book running lead managers and Link Intime India is the registrar to the offer. The shares are proposed to be listed on BSE and NSE.
About 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.
APIs are active pharmaceutical ingredients which are used to manufacture drugs and medicines. It also provides formulations in areas like immunosuppressants, nephrology drugs, and anti-infective drugs.
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’s operational revenue increased by 19.67% to ₹853.17 crore in FY23 as compared to the year before. This growth is primarily attributed to increased sales volume to existing and new customers, as well as certain product price adjustments, the company said.
Its net profit also went up by 37.24% in FY24, after slumping the year before.
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.
A significant portion of its revenue comes from a limited number of customers. As of March 2023, it had over 200 customers in over 70 countries. Our existing patents and trademarks may expire, and we cannot assure you that we will be able to renew them after expiry, it added.
They are also entitled to certain incentive schemes, and any decrease or discontinuation may affect the results of its operations.