Symbiotec IPO draws positive brokerage views on strong API portfolio growth

The ₹1,757-crore Symbiotec Pharmalab initial public offering (IPO) has garnered positive reviews from brokerages given its valuation and strong position in the pharmaceutical and biotechnology space. The offer is slated to open on Monday, August 24, and close on Thursday, August 27.

 

 The grey market premium for the offer appears robust. As of 09:14 AM, August 24, Symbiotec Pharmalab IPO listing price is estimated at ₹1,397, up 41.40 per cent from the offer price. 

 

Symbiotec Pharmalab IPO is engaged in API products, CDMO Services and Complex Injectables. The company has a product portfolio of over 60 corticosteroid and steroidal-hormone APIs that are supplied globally and are used extensively in critical care setups, as well as across chronic therapeutic areas such as respiratory, dermatology, pain management, oncology and gynaecology. 

 

 

Symbiotec Pharmalab IPO Details

Symbiotec Pharmalab IPO is a mix of a fresh issue of ₹15 lakh and an offer for sale of ₹1.63 crore. The price band for the offer is set issue price band at ₹938 to ₹988 per share.

 

Investors can apply for the offer in lots of 15 shares and multiples thereof. 

 

The company proposes to utilise the net proceeds from the issue towards the prepayment and/or repayment, in full or in part, of certain outstanding borrowings, for which ₹112.50 crore has been earmarked. The remaining proceeds will be used for general corporate purposes.

 

Symbiotec Pharmalab IPO Review

Analysts recommend ‘Subscribe’ to the offer from a long-term perspective. 

 

SBI Securities analysts said that Symbiotec Pharmalab is a pharmaceutical and biotechnology company with capabilities across organic chemistry, biotechnology and complex injectables. The company carries a global leadership position in corticosteroid and steroidal-hormone APIs in volume terms. 

 

Historically, the company has grown its revenue, Earnings Before Interest, Taxes, Depreciation and Amortisation, and adjusted Profit After Tax at a compound annual growth rate of 10.2 per cent, 17.8 per cent and 7.8 per cent, respectively, between FY24 and FY26, the brokerage said.

 

“At the upper price band of ₹988, the issue is valued at 54.6 times its FY26 price-to-earnings (P/E) ratio based on the post-issue share capital. Compared with its peers, the issue appears to be reasonably valued. We recommend investors subscribe to the issue at the cut-off price,” SBI Securities said.

 

Meanwhile, another brokerage firm Swastika, highlighted that Symbiotec has expertise in complex synthesis, and that stringent regulatory requirements in this segment create significant entry barriers and provide the company with a specialised position in the industry. “At around 56.8 times price-to-earnings (P/E), the valuation remains high, although it is lower than peers such as Divi’s at around 87.8 times, Laurus at 109.3 times and Concord at 61.1 times,” the firm said.

 

However, Swastika also noted that the issue includes an offer for sale (OFS) worth ₹1,607 crore by promoters and private equity funds, with only ₹150 crore going to the company. Further, FY26 return on equity (ROE) of around 11.19 per cent and return on capital employed (ROCE) of around 11.56 per cent provide limited comfort at a valuation of nearly 57 times earnings. “The stock may therefore be more suitable for long-term investors looking for exposure to specialised steroidal and hormone APIs, while keeping the high valuation in mind,” the brokerage said.

   

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.