Sai Life Sciences IPO day 1: GMP, subscription status, review, and other key details. Apply or not?

Sai Life Sciences IPO day 1: The initial public offering (IPO) of contract research, development and manufacturing organisation Sai Life Sciences has opened for public subscription today, i.e., Wednesday, December 11. With a price band of ₹522 to ₹549 per share, the issue will remain open till Friday, December 13. The company is expected to finalise share allotment on Monday, 16 December. Successful bidders will receive shares in their demat accounts on Tuesday, December 17. Refunds for unsuccessful applicants will also be processed on the same day. Meanwhile, the company raised ₹913 crore from anchor investors ahead of its IPO.

Sai Life Sciences IPO GMP

According to stock market sources, the last grey market premium (GMP) of Sai Life Sciences was ₹31. Considering the upper price band of ₹549, the expected listing price of the stock is ₹580, a premium of nearly 6 per cent.

Sai Life Sciences IPO subscription status

Sai Life Sciences IPO subscription status will be updated after 10 am.

The ₹3,043 crore book-built issue, Sai Life Sciences IPO, combines the new issuance of equity shares of about ₹950 crore and an offer for sale (OFS) of up to 3.81 crore equity shares by a promoter, investor shareholders, and various other shareholders.

The company intends to use the net proceeds from the issue to repay or prepay certain outstanding borrowings, as well as for general corporate purposes.

Kotak Mahindra Capital Company Limited, Jefferies India Private Limited, Morgan Stanley India Company Pvt Ltd, and IIFL Securities Ltd are the book-running lead managers for the Sai Life Sciences IPO. Kfin Technologies Limited serves as the registrar for the issue.

Sai Life Sciences IPO review

Sai Life Sciences is a global player in contract research, development and manufacturing organisation (CRDMO) segment. According to the Red Herring Prospectus (RHP) of the company, it provides “end-to-end services across the drug discovery, development, and manufacturing value chain for small-molecule new chemical entities (NCE) to global pharmaceutical innovator companies and biotechnology firms.”

The company earned a profit after tax (PAT) of ₹82.81 crore in FY24, higher than the PAT of ₹10 crore and ₹6.23 crore in FY23 and FY22, respectively. The company’s profit after tax for the six months of FY25 stood at ₹280.12 million.

Wealth management and investment advisory firm DRChoksey FinServ Private Limited underscored that the company benefits from a robust product pipeline, serving over 280 clients, including 18 of the top 25 global pharmaceutical firms.

However, the wealth management firm pointed out that its significant reliance on key clients, limited diversification across treatment areas and high infrastructure costs pose risks to sustained profitability.

Moreover, it also raises questions about the stretched valuation of the IPO.

“With a P/E (price-to-earnings) multiple of 138 times, the valuation appears stretched compared to peers in the industry. This premium valuation, coupled with operational risks and margin pressures, limits its investment attractiveness despite growth potential in the global CRDMO market. Therefore, we assign an ‘avoid’ rating,” said DRChoksey FinServ, in its report on December 10.

Should you apply or not?

Some experts highlight the issue’s stretched valuation and suggest avoiding it for listing gains. However, some appear upbeat about the company’s growth prospects and suggest subscribing to the IPO for the long term.

Palak Devadiga, a research analyst at StoxBox, has a ‘subscribe’ rating on the IPO.

“The company’s PAT margin grew from 0.72 per cent in FY22 to 5.65 per cent in FY24, with revenue and EBITDA at 29.8 per cent and 53.4 per cent CAGRs. While the valuation appears high, the company’s strong performance and favourable industry trends make it a promising opportunity for medium to long-term investors. Therefore, we recommend a ‘subscribe’ rating for this issue,” said Devadiga.

Devadiga highlighted that the global CRDMO market, projected at $159 billion by 2028, benefits from rising R&D outsourcing and cost-efficient drug demand. India’s CRDMO market, growing at a 14 per cent CAGR (2023-28), further boosts the sector.

Devadiga believes Sai Life’s strategically located facilities, regulatory approvals (USFDA, PMDA, COFEPRIS), and skilled workforce ensure cost-effective operations.

VLA Ambala, the co-founder of Stock Market Today, pointed out that Sai Life Sciences aims to use the net proceeds from the 950 crore IPO to repay or prepay, in whole or in part, outstanding debts and meet general corporate purposes. This move could enhance its financial stability and support its growth prospects.

“Given the business category, the company is expected to grow significantly. Based on these aspects, I recommend applying for and holding positions in this IPO. Those interested may buy its shares in the secondary market at the proposed price band if they don’t receive allotment,” said Ambala.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.