Jhunjhunwala backed, Concord Biotech is coming up with an IPO that would open for subscription on August 4, 2023. Concord Biotech is a prominent India-based biopharma company with a strong global presence. Its core focus lies in the development and manufacturing of fermentation-based APIs (Active Pharmaceutical Ingredients) in the areas of immunosuppressants and oncology. Should you invest in Concord Biotech IPO or avoid?
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Concord Biotech IPO Details
IPO Opening Date | 04-Aug-23 |
IPO Closing Date | 08-Aug-23 |
IPO Listing Date | 18-Aug-23 |
Issue Type | Book Built Issue IPO |
Face Value | Rs 1 per equity share |
IPO Price band | Rs 705 to Rs 741 per equity share |
Lot Size | 20 Shares |
Min Order Quantity | 20 Shares |
Listing at | BSE and NSE |
Total Issue Size | Rs. 1551 Crores |
Fresh issue | Rs. 0 Crores |
OFS | Rs. 1551 Crores |
Concord Biotech IPO Reservation
QIB shares offered | Not less than 50% of the offer |
NII/HNI shares offered | Not more than 15% of the offer |
Retail shares offered | Not more than 35% of the offer |
What is Concord Biotech IPO Market Lot?
Application | Lot Size | No. of Shares | Amount |
---|---|---|---|
Retail (Min) | 1 | 20 | 14,820 |
Retail (Max) | 13 | 260 | 1,92,660 |
S-HNI (Min) | 14 | 280 | 2,07,480 |
S-HNI (Max) | 67 | 1340 | 9,92,940 |
B-HNI (Min) | 68 | 1360 | 10,07,760 |
About Concord Biotech Ltd
They are a prominent India-based biopharma company with a strong global presence. Its core focus lies in the development and manufacturing of fermentation-based APIs (Active Pharmaceutical Ingredients) in the areas of immunosuppressants and oncology. As of 2022, they commanded a significant market share of over 20% by volume for identified fermentation-based API products. With a total installed fermentation capacity of 1,250 m3 as of March 2023, they supply APIs to over 70 countries, including regulated markets like the United States, Europe, Japan, and India.
Besides, they have successfully expanded its formulation business in several emerging markets. Its expertise in fermentation-based API manufacturing sets us apart from competitors, as this process presents considerable technical challenges and barriers to entry. The global market for small-molecule fermentation-based APIs is expected to grow steadily in the coming years, driven by the therapeutic areas of immunology, oncology, and anti-infectives, where we already have a strong foothold.
Concord Biotech Ltd Financials
Here are the financials of the company.
Financial Year ending / Period ending (Amt in Crores) | |||
Particulars | FY21 | FY22 | FY23 |
---|---|---|---|
Total Assets | 1,182.6 | 1,312.8 | 1,514.0 |
Total Revenue | 630.8 | 736.4 | 888.5 |
Profit After Tax | 234.9 | 174.9 | 240.1 |
Profit % | 37.24% | 23.76% | 27.02% |
Net Worth | 999.4 | 1,103.2 | 1,290.0 |
Total Borrowing | 86.4 | 60.6 | 31.2 |
Objects of the Issue
The IPO size is Rs 1,551 Crores and the entire amount is Offer for Sale.
Under OFS, these are sold by selling shareholders and proceeds would go to selling shareholders and company would not get anything.
How is Concord Biotech IPO Price Valuation?
Its IPO price band is Rs 705 to 741 per share
- If we consider last year FY23 EPS of Rs 22.95, P/E ratio works out to be 32x
- If we consider Last 3 Years Weighted EPS of Rs 20.79, P/E ratio works out to be 36x
- The listed peers like Divi’s Laboratories trading at P/E 54x (Highest) and Laurus Labs Limited is trading at P/E of 23.7x (Lowest) and industry average P/E is 36x.
- Hence, the IPO Price band at P/E of 32x to 36x is fully-priced.
What is Concord Biotech IPO GMP today?
As per the market sources, Grey market premium now is at Rs 240 per share. Some sources indicate that GMP has fallen significantly in the last couple of days.
What are Concord Biotech IPO Expected Returns?
Grey market premium is around 30%, which gives an indication that Concord Biotech ipo expected price could be in similar lines, i.e. Higher by 30%.
Concord Biotech IPO Allotment & Listing Dates
IPO Opens on | 04-Aug-23 |
IPO Closes on | 08-Aug-23 |
Basis of Allotment | 11-Aug-23 |
Initiation of Refunds | 14-Aug-23 |
Credit of Shares to Demat | 17-Aug-23 |
Listing Date | 18-Aug-23 |
Cut-off time for UPI mandate confirmation | 08-Aug-23 |
Concord Biotech Competitive Strengths
- Established presence across the complex fermentation value chain
- Global leadership in immunosuppressant APIs along with a wide spectrum of complex fermentation-based
- APIs across multiple therapeutic areas
- Scaled manufacturing facilities with a consistent regulatory compliance track record and supported by strong R&D capabilities
- Diversified global customer base with long-standing relationships with key customers
- Experienced Promoters, management team supported by marquee investors
- Financial track record of rapid growth and consistent profitability with healthy cash flows and shareholder returns
Concord Biotech IPO – Positive Factors to invest
Strong Global Presence: Concord Biotech has a prominent presence in the biopharma industry globally, indicating their ability to access a wide customer base and compete in international markets.
Leadership in Fermentation-based APIs: With a significant market share in fermentation-based API products, particularly in immunosuppressants and oncology, the company has demonstrated expertise and capabilities in this specialized field.
Diversified Market Reach: Supplying APIs to over 70 countries, including regulated markets like the United States, Europe, Japan, and India, diversifies risk and provides exposure to multiple growth markets.
Successful Formulation Business Expansion: The company’s successful expansion of its formulation business in emerging markets showcases its ability to seize new opportunities and diversify revenue streams.
Technical Expertise in Fermentation-based API Manufacturing: Concord Biotech’s expertise in this complex process acts as a significant entry barrier for competitors, providing a competitive advantage.
Strong Growth Potential: The global market for small-molecule fermentation-based APIs is expected to grow steadily, and Concord Biotech’s strong foothold in key therapeutic areas positions them well to benefit from this growth.
Established Presence in Key Therapeutic Areas: The company’s presence in immunosuppressant APIs and other therapeutic areas like oncology and anti-infectives diversifies its revenue streams within the biopharma sector.
Strong Financial Track Record: Concord Biotech has shown rapid growth and consistent profitability with healthy cash flows and shareholder returns, reflecting its financial stability.
Jhunjhunwala backed: Helix Investment Holdings Pte Ltd, supported by Quadria Capital Fund LP, holds a 20% ownership stake in the company. Rakesh Jhunjhunwala, through his asset management firm RARE Enterprises (via RARE Trusts), previously owned 24.09% of the company. The ownership is now in the name of Rekha Jhunjhunwala. Rekha and Rakesh Jhunjhunwala invested in Concord Biotech in 2004.
Concord Biotech IPO – Risk or Negative Factors
Regulatory and Compliance Risks: Being a biopharma company, Concord Biotech is subject to rigorous regulatory requirements. Any non-compliance or changes in regulations could impact the company’s operations and financial performance.
Dependency on Fermentation-based APIs: Concord Biotech’s significant reliance on fermentation-based API products, particularly in immunosuppressants and oncology, exposes it to risks associated with market demand fluctuations and changes in preferences.
Intense Competition: The biopharma industry is highly competitive, and Concord Biotech faces competition from numerous established and emerging players. Intense competition may affect its market share and pricing power.
Currency and Geopolitical Risks: Operating in multiple countries exposes Concord Biotech to currency exchange rate risks, which could impact revenues, costs, and overall financial results. Additionally, conducting business in various global markets exposes the company to geopolitical risks that could affect operations and market access.
Technological and R&D Challenges: The biopharma sector experiences rapid technological changes, and failure to keep up with advancements could impact the company’s product development and competitiveness. The success of research and development efforts is not guaranteed, and any unsuccessful R&D projects may affect future growth prospects.
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Concord Biotech IPO Review – Should you Invest or Avoid?
Concord Biotech Ltd offers a strong global presence in the biopharma industry, supplying fermentation-based APIs to over 70 countries, including regulated markets. With a significant market share in immunosuppressants and oncology, the company has expertise in this specialized field. Its successful formulation business expansion and financial track record demonstrate stability and growth potential.
However, the IPO’s price band at a P/E ratio of 32x to 36x is fully priced. Intense competition in the biopharma sector and stringent regulatory requirements pose risks. Dependency on fermentation-based APIs and exposure to currency fluctuations and geopolitical uncertainties also need consideration. Rapid technological changes and R&D uncertainties may impact product development.
Investors with high risk appetite can consider investing in such IPOs.
FAQ’s on Concord Biotech IPO
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