Sai Life Sciences is a fast-growing contract research, development, and manufacturing organisation (CRDMO), rapidly expanding its footprint in the industry. The company works with over 280 global pharma and biotech companies to accelerate the discovery, development, and commercialisation of small molecule programs. As a pure-play, full-service CRDMO, Sai Life Sciences stands out as a leader in its sector, showing significant growth over recent years.

Sai Life Sciences IPO Details

The Sai Life Sciences IPO, totaling ₹3,042.62 Crores, comprises a Fresh Issue of ₹950 Crores and an Offer for Sale (OFS) worth ₹2,092.62 Crores. The IPO opens on December 11, 2024, and closes on December 13, 2024. The price band is set at ₹522 to ₹549 per equity share, with a lot size of 27 shares. Retail investors must invest a minimum of ₹14,823, while High-Net-Worth Individuals (HNIs) must invest in at least 14 lots, amounting to ₹2,07,522.

The Market Capitalisation of the company at the upper IPO price band of ₹549 will be ₹11,418.62 Crores, and the allotment is expected to be finalized on December 16, 2024, with listing on December 18, 2024.

Grey Market Premium (GMP) and Subscription Status

As of December 13, 2024, the Sai Life Sciences IPO has been subscribed 10.26 times on its final day of subscription. The Grey Market Premium (GMP) stands at ₹48, suggesting an 8.66% expected listing gain. The IPO price of ₹549 implies an anticipated listing price of ₹597.

Please note that the GMP is speculative and based on unregulated market activities, so it should not be used as the sole indicator for decision-making.

Financial Performance & Valuation

Sai Life Sciences has shown strong growth, with revenues increasing from ₹8,977.41 Million in FY22 to ₹14,942.69 Million in FY24. Its EBITDA has grown from ₹1,459.58 Million in FY22 to ₹2,881.55 Million in FY24. The profit after tax for FY24 stood at ₹828.09 Million, up significantly from ₹62.26 Million in FY22.

For the IPO, the company’s pre-issue P/E ratio is 121.19x, and its post-issue P/E ratio stands at 136.21x, compared to the industry P/E ratio of 95.33x. The ROCE for FY24 is 10.26%, and RoE stands at 8.49%. These figures suggest that while the IPO is growing rapidly, it is fully priced relative to the industry.

Objectives of the Sai Life Sciences IPO

The proceeds from the Fresh Issue will be used for the following purposes:

1. ₹7,200 Million for the repayment/prepayment of outstanding borrowings.
2. General corporate purposes.

Investment Recommendation

Given the high P/E ratio, the full pricing of the IPO, and the lower-than-expected GMP, we recommend investors to avoid applying for the Sai Life Sciences IPO, especially for listing gains or long-term investment purposes. While the company shows strong financials and growth, the valuation may not justify an immediate investment at this stage.

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