Indegene IPO opens today, May 06. Planning to subscribe? What analysts say

Indegene, a healthcare solutions company, initial public offering (IPO) opens for subscription today, the company has announced the price band for IPO at Rs 430-452 per share. The total offering amounts to Rs 1,841.76 crore, comprising a fresh issue of Rs 760 crore and an offer for sale of 2.3 crore shares aggregating up to Rs 1,081.76 crore. The IPO is scheduled to close on May 8.

The proceeds from the fresh issue will be utilised by Indegene to repay debt owed by one of its subsidiaries, ILSL Holdings, finance capital expenditures for itself and another subsidiary, Indegene Inc, and allocate funds towards general business requirements and future growth opportunities, including inorganic growth.

Indegene Limited secured over Rs 548.77 crore from anchor investors on May 3, at the upper price band of Rs 452 per equity share, in anticipation of its initial public offering (IPO).

According to analysts, the valuation of the company is fairly priced, recommending investors to subscribe the IPO for listings gains and long term gains. 

Indegene provides services for the life sciences industry. They assist with drug development, clinical trials, regulatory submissions, pharmacovigilance, complaints management, and sales and marketing support. 

In financial year 2023, Indegene reported Rs 2,306.13 crore in revenue from operations with a profit of Rs 266 crore.

The firm has appointed Kotak Mahindra Capital Company, Citigroup Global Markets, J.P. Morgan India, and Nomura Financial Advisory and Securities as book lead managers.

Here’s what key brokerages say:

Anand Rathi: According to those at Anand Rathi, Indegene has long-standing relationships with marquee biopharmaceutical companies including each of the 20 largest biopharmaceutical companies in the world by revenue for the Financial Year 2023. 

Due to the sticky nature of their solutions, recurring revenues account for a high proportion of their total revenues. Their retention rates were 122.83 per cent, 159.89 per cent

and 129.90 per cent for the Financial Years 2023, 2022 and 2021, respectively.

The company has a proven track record of creating value through strategic acquisitions. Moreover, with a global footprint and delivery centres strategically located around the world, the company offers support to clients on a global scale. This enables flexible collaboration, efficient project execution, and timely delivery of services across different regions, analysts wrote in an IPO note. 

“At the upper price band, the company is valued at P/E of 40.6x with a market cap of ₹10,814 million post issue of equity shares. We believe that valuation of the company is fairly priced and recommend a “Subscribe” rating to the IPO,” Kuber Chauhan, equity research analyst at Anand Rathi wrote in a recent report. 

Swastika: Analysts at Swastika believe that Indegene’s financial performance reflects consistent growth over the past three fiscal years, supported by a robust client base of 65

active clients as of December 31, 2023. Additionally, the company possesses a well-developed technology portfolio, further solidifying its digital capabilities.

“While the P/E valuation of 37.79x appears reasonable, the absence of directly comparable listed peers limits a definitive assessment. However, considering Indegene's unique market position, strong growth trajectory, and established client base, we recommend this IPO to investors for listing gain and long term,” the brokerage firm said in a statement.