Supriya Lifescience Limited is a company that manufactures Active Pharmaceutical Ingredients (APIs). APIs are raw materials used in making drugs, medicines, vaccines, and other pharmaceutical products. Supriya Lifescience has filed for an Initial Public Offering (IPO) that goes live on December 16, 2021, and closes on December 20, 2021. The company plans to raise close to Rs 700 crore through the IPO. In this piece, we discuss the company’s business model, its finances, and what makes this IPO stand out from others. 

Business Model

  • Headquartered in Mumbai, Supriya Lifescience Ltd produces 38 APIs focused on diverse therapeutic segments such as antihistamine, analgesic, anaesthetic, vitamin, anti-asthmatic and antiallergic. It is the largest exporter of Chlorpheniramine Maleate (CPM) and Ketamine Hydrochloride from India. CPM is used to treat hay fever, allergy and the common cold, whereas Ketamine Hydrochloride is used to make anaesthetic to induce a loss of consciousness and relieve pain. 
  • According to a CRISIL report, the company was the largest exporter of Salbutamol Sulphate in India, contributing to 31% of the API exports from India in FY 2021 in terms of volume. Salbutamol Sulphate is used to treat asthma, bronchospasm, and reversible airways obstruction.
  • Ketamine Hydrochloride contributed the most to the revenue stream. In FY21, it contributed to 27.42% of total revenue, followed by Chlorpheniramine Maleate and Salbutamol Sulphate, which contributed 18.17% and 9.86%, respectively.
  • The company has a manufacturing plant in Lote in Ratnagiri District of Maharashtra. The main manufacturing plant at Lote is spread across 23,806 sq. mts, having a reactor capacity of 547 KL/ day and seven cleanrooms. The company has also acquired a plot of land of 12,551 sq. mt, near the present manufacturing facility for expanding capacity. The manufacturing plant has been approved by international drug agencies like USFDA, EDQM, TGA Australia, KFDA-Korea, PMDA-Japan, NMPA (previously known as SFDA)- China, Health Canada.
  • The company is export-oriented, with only 22.53% of total revenue coming from India for FY21. Its products were exported to 86 countries to 1,296 customers including 346 distributors. In all, Asia (excluding India) contributed to 29.3% of the total revenue, followed by Latin America at 19.2%, Europe at 17.4%, and North America at 4.8%. 
  • At present, the company is entirely owned by the Wagh Family. Chairman Satish Wagh, his mother Asha Waman Wagh, wife Smita Satish Wagh, daughters Shivani and Saloni Wagh are the sole promoters in the company. 

Financial Performance

  • The company has witnessed consistent growth in Total Revenue, Profit After Tax, and Total Asset holdings. 
  • The company’s total income, EBITDA, and profit after tax grew at a CAGR of 17.73 %, 56.47%, and 77.23%, respectively, from Fiscal 2019 to Fiscal 2021.
  • As of September 30, 2021, the company had total borrowings of Rs 70.9 crore, down from a debt of Rs 89.8 crore in FY19. 

IPO Details in a Nutshell

The company plans to raise a total of Rs 700 crore through the IPO. It would get Rs 200 crore in hand, and the remaining Rs 500 crore would go to the promoter Satish Waman Wagh. According to the company’s ‘Objects of the Offer’, it plans to use the money for the following purposes:

  • Rs 92.3 crore to be used for funding capital expenditure requirements of the company.
  • Rs 60 crore would be used for repayment or prepayment of borrowings or debt.

The Way Ahead

Supriya Lifescience will be one of the many pharmaceutical companies that get listed this year. The company’s diversified product portfolio and global market reach make it a relatively safer bet than others. It has even managed to diversify geographically, ensuring that geopolitical instability in a particular region does not impact the company’s performance. The company has shown strong growth in terms of Revenue, Net Profit, and Asset Holdings. 

Through this IPO, the company plans to pay off ~85% of its total borrowings and still have a great amount for capital expenditure. Supriya Lifesceinces’s IPO shares are trading at a Grey Market Premium (GMP) of 91%. This means that the shares are trading at 91% more than their upper issue price band of Rs 247. It is advised that investors do thorough research before investing in all IPOs. You can check the official Red Herring Prospectus over here.