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Glenmark Life Sciences IPO fully subscribed on Day 1 but grey market premium slips

On the initial day of bidding, Glenmark Life Sciences continued to trade at a weak premium in the grey market.

Glenmark Life Sciences initial public offering (IPO) opened today and received a strong response from investors, fully subscribing to the issue in less than two hours. Retail investors lead the charge oversubscribing the issue. Glenmark Life Sciences, a subsidiary of the already listed Glenmark Pharmaceuticals, is a developer and manufacturer of high value, non-commoditized APIs in chronic therapeutic areas with a strong partnership with global players. The Rs 1,541 crore public issue is a mix of fresh issue of equity shares and an offer for sale (OFS) by existing shareholders. On the initial day of bidding, Glenmark Life Sciences continued to trade at a weak premium in the grey market. 

So far, retail investors have subscribed to the issue 2.46 times. Retail investor interest has been strong for the public issue, subscribing to their quota of the issue within the initial hour. Non-institutional investors have subscribed to the issue 0.21 times so far. Meanwhile, Qualified Institutional Buyers (QIB) are yet to bid for the issue in any significant quantity. 50% of the IPO is reserved for QIBs while 35% is for retail investors and the remaining 15% is for NIIs. Overall the issue has been subscribed 1.28 times with investors bidding for 2.02 crore equity shares from the 1.5 crore on offer.

Grey market premium weak

In the unlisted space, Glenmark Life Sciences was trading in the range of Rs 125-150 per share. “The movement has been weak. It opened earlier at around Rs 300 per share but has now slipped,” Sandip Ginodia, CEO, Abhishek Securities told Financial Express Online. Ahead of the issue, Glenmark Life Sciences was trading at a premium of Rs 135 per share in the grey market.

Should you subscribe?

The company will get Rs 1,060 from the issue while the rest will go to the selling shareholders as part of the OFS. Glenmark plans to pay off business purchase considerations. “This will eradicate the interest obligations of the company and PAT margins will exceed further,” said Kaushlendra Singh Sengar Founder & CEO at INVEST19. “Backed by strong promoters and received 38 inspections and audits by global regulators, Glenmark Life Sciences IPO deserves ‘Subscription’. As a subsidiary of Glenmark pharmaceuticals, the learning curve of the company is high in maintaining its manufacturing facilities,” he added.

Glenmark Life Sciences has a strong regulatory record, having not received any warning letters/import alerts from regulatory authorities. On the upper end of the price band, analysts at ICICI Direct say the issue is priced at FY21 EV/EBITDA of 14.7x. ICICI Direct has a subscribe rating on the stock.

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