Sai Life Sciences, a rapidly growing contract research, development, and manufacturing organization (CRDMO), is set to launch its Initial Public Offering (IPO) in December 2024. Known for its expertise in working with global pharmaceutical and biotech companies, the company plays a crucial role in accelerating the development of New Chemical Entities (NCEs). This article explores the key aspects of the Sai Life Sciences IPO, including the pricing, subscription details, GMP (Grey Market Premium), and our review of the investment opportunity.

1. Sai Life Sciences IPO Key Details:

The Sai Life Sciences IPO offers a fresh issue of ₹950.00 Crores and an offer for sale (OFS) of ₹2,092.62 Crores. The total size of the IPO is ₹3,042.62 Crores. The shares will be priced between ₹522 to ₹549 per share, with a market capitalization of ₹11,418.62 Crores at the upper price band of ₹549. Retail investors can apply for a minimum of 27 shares, amounting to ₹14,823.

The subscription period for this IPO opens on December 11, 2024, and closes on December 13, 2024. The allotment is expected to be finalized by December 16, 2024, with the shares listing on the BSE and NSE around December 18, 2024.

2. Financial Overview and Growth Potential:

Sai Life Sciences is one of the fastest-growing CRDMOs in India, with an impressive revenue and EBITDA growth trajectory. For the fiscal years 2022, 2023, and 2024, the company reported revenues of ₹8,977.41 million, ₹12,451.05 million, and ₹14,942.69 million, respectively. Its EBITDA for the same period grew from ₹1,459.58 million to ₹2,881.55 million, reflecting strong operational efficiency.

Despite these positive financials, the company’s profit after tax (PAT) has been relatively modest, increasing from ₹62.26 million in FY22 to ₹828.09 million in FY24. This growth reflects the company's improving profitability.

However, the company’s pre-issue P/E ratio stands at 121.19x, while the post-issue P/E ratio is 136.21x, which is higher than the industry P/E ratio of 95.33x. This suggests that the IPO is priced at a premium, which may deter value-conscious investors.

3. Sai Life Sciences IPO GMP and Market Sentiment:

As of the latest updates, the Grey Market Premium (GMP) for the Sai Life Sciences IPO is ₹48, which indicates a potential listing gain of 8.66%. However, it is important to note that GMP is speculative and not a reliable indicator of long-term performance. The actual listing price of the shares will depend on market conditions at the time of the IPO listing.

The IPO has received significant attention from anchor investors, raising ₹912.79 Crores. A total of 1,66,26,336 equity shares were allocated to anchor investors at the upper price band of ₹549 per share.

4. Subscription and Allotment Status:

As of December 11, 2024, the IPO has been subscribed 0.05 times on the first day. The final subscription status can be tracked real-time on the BSE website. Retail investors can check their allotment status by visiting the registrar’s website after December 16, 2024.

5. Objectives of the Sai Life Sciences IPO:

The fresh issue proceeds will be utilized primarily for the following purposes:

• Repayment/prepayment of borrowings: A portion of the proceeds, ₹7,200.00 million, will be used to reduce the company’s debt load.
• General corporate purposes: The company will also allocate funds to support its ongoing and future business expansion plans.

Sai Life Sciences IPO Review:

While Sai Life Sciences is poised for significant growth in the CRDMO sector, the IPO is priced at a relatively high valuation, with a pre-issue P/E ratio of 121.19x and a post-issue P/E ratio of 136.21x. Given these factors, we believe the IPO is priced fully, and investors should be cautious if they are considering long-term investments or looking for short-term listing gains.

Although the company’s financials show promising growth, especially in terms of revenue and EBITDA, the high valuation might not offer substantial upside potential in the short term. The GMP of ₹48 indicates moderate listing gains, but this could be impacted by broader market conditions and investor sentiment at the time of listing.

In conclusion, Sai Life Sciences is a strong player in the CRDMO space, but with a relatively high valuation, we recommend investors exercise caution and consider other investment options with better valuations, especially if looking for long-term investments.

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