HNIs incur losses as Glenmark Life Sciences ends flat on listing day

Market observers said HNIs had placed leveraged bets, and lost big as their break even cost was more than Rs 850 per share

Shares of Glenmark Life Sciences ended with a gain of less than 4 per cent during their stock market debut on Friday. The subsidiary of Glenmark Pharmaceuticals saw its stock price end at Rs 746 crore, up Rs 26, or 3.6 per cent over the issue price of Rs 720 per share on the NSE, where Rs 1,545 crore worth of shares changed hands. The stock hit a high of Rs 799 and a low of Rs 738 in intra-day trade.

The first-day performance was muted compared to previous four listings, which had gained between 65 per cent and 113 per cent on debut.

Market observers said high networth individuals (HNIs), who had placed leveraged bets, incurred heavy losses as their break even cost was in excess of Rs 850 per share.

The HNI portion of the IPO had garnered 126 times subscription. Overall, the IPO was subscribed 45 times.

Glenmark Life Sciences, a developer and manufacturer of active pharmaceutical ingredients (APIs), is currently valued at Rs 9,167 crore.

“Considering the FY21 adjusted earnings of Rs.28.7 per share on post issue basis, the P/E works out to 25 times, while its peers namely Divi’s Laboratories, Laurus Labs and Shilpa Medicare are trading at a P/E of 64.0, 36.1 and 36.5 respectively,” says a note by Marwadi Financial Services.

Glenmark Life's IPO comprised a fresh issue of Rs 1,060 crore and an offer for sale worth Rs 453.6 crore. Post the IPO, Glenmark Pharma's stake will come down from 100 per cent to 82.84 per cent.

The company proposes to utilise the net proceeds from the fresh issue towards payment of outstanding purchase consideration to the promoter for the spin-off of the API business from the promoter into the company. And they are funding the capital expenditure requirements.

The company is a developer and manufacturer of select APIs in chronic therapeutic areas, including cardiovascular disease, central nervous system disease, pain management and diabetes. The company also provides contract development and manufacturing operations services to multinational and specialty pharmaceutical companies.