Supriya Lifescience IPO: Should you subscribe? See what brokerages, market experts recommend

Supriya Lifescience Limited, one of the key Indian manufacturers and suppliers of active pharmaceutical ingredients (APIs) with a focus on research and development, opened for subscription on Thursday, December 16, 2021. The three-day share sale will close on December 20, 2021. 

As the public offer opened amid tremendous response from investors, most of the brokerages and experts have given it thumbs up. They are of the view that the company holds promise going forward and the issue has been offered at reasonable valuations.  

Talking about this initial public offer (IPO), Yash Gupta, Equity Research Analyst, Angel One Ltd, said Supriya Lifescience Limited focuses on research & development and has a diversified niche product portfolio of API’s.

"Based on FY2021 numbers, the IPO is priced at an EV/EBITDA of 11.2 times and price to earnings of 16.2 times at the upper price band of the IPO. Companies 77.5% of revenue comes from the Export market, including the USA, Europe, China and India. We believe that the company's new manufacturing unit and product launch will act as growth drivers for the company in future. We assign a “SUBSCRIBE” recommendation to the Supriya Lifescience Limited IPO," said Yash Gupta.  

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Anand Rathi Share and Stock Brokers Ltd on Thursday recommended to apply for this issue with long-term objective.  

The company has significant scale with leadership position across & niche products along with backward integrated and advanced manufacturing, research and development capabilities, said the brokerage house.  

"The company has high profit margins, strong balance sheet and reported RoNW of 46.04% in FY21. However, the IPO is fully priced and demanding rich valuations - hence we give the IPO a "Subscribe (Long Term)" rating," said a Anand Rathi report on the ongoing public offer.  
Recommending to subscribe, Motilal Oswal said We like SLL given due to niche product portfolio in diverse therapeutic segments, backward integrated business model with advanced manufacturing and R&D capabilities.  

It also has extensive global presence with strong clients’ relation and robust financials.  

"It is well placed to tap opportunity in the pharma API market given its strong pipeline focused on further diversification. The issue is reasonably valued against its peers even as it enjoys similar growth trajectory. We recommend Subscribe," said Motilal Oswal in its IPO report

Marwadi Shares and Finance Limited also suggested to apply for this issue.  

"We assign a “Subscribe” rating to this IPO as the company has a significant scale with a leadership position across key & niche products. Also, it is available at a reasonable valuation as compared to its peers," said Marwadi Shares and Finance Limited.    

Zee Business Managing Editor Anil Singhvi recommended to apply for this offer. "Apply for big listing gain and with long-term objective. This is one such IPO that can double investors' money on the listing day as the management has kept room for listing gain. They have kept the valuations cheaper," he said.  

The company proposes to utilise the net proceeds towards funding capital expenditure requirements of the company, repayment and/or pre-payment of certain borrowings and general corporate purposes.