Concord Biotech IPO has opened today for subscription and analysts are out with their coverage report on the biopharma company. The upcoming IPO aims to mobilize INR 1551 crores through an offer for sale of shares. Priced at INR 705 – 741 per share, the IPO will remain active through 8 August 2023. Concord Biotech IPO ratings are mostly positive and analysts have highlighted multiple positive factors including strong operating performance, better cost-efficiencies, and a deep understanding of the development and manufacturing of fermentation-based APIs across immunosuppressants and oncology.
Concord Biotech IPO Ratings: Brokers Upbeat About Prospects
A positive word came from Canara Bank Securities which finds merit in prominent global player in the development and manufacturing of fermentation-based APIs across immunosuppressants and oncology. “The company has grown at a 2-year CAGR of 17.5% over 2021-2023 with an EBITDA margin of 40.47% as of 2023 with increasing cash conversion ratio and strong ROCE and ROE. It is well-established presence across the complex fermentation value chain with a strong market share backed with strong R&D with a fair valuation vis a vis its peers makes it an issue to Subscribe for listing gains and long term” noted its research report.
Similar positivity was expressed by Choice Broking in its research note “At the higher price band, CBL is demanding a P/E multiple of 32.3x (to its FY23 earning), which is at a discount to the peer average. Growth in the global market of fermentation-based APIs is expected to be driven by immunology, oncology, and anti-infective therapeutic areas. CBL is focusing on these therapeutic areas with its wide range of niche & complex APIs. Moreover, considering its manufacturing capabilities and geographic presence CBL is well-placed to benefit from the expansion in the market. Thus, we assign a “SUBSCRIBE” rating for the issue.”
Samco Securities said the “growth in Pharma spending is aided by the launching of low-cost generics & biosimilars for making drugs more accessible to a larger population, new innovations which would cater to unmet health needs, and improved accessibility to healthcare services. Based on the company’s performance, and management outlook, the earnings valuation of 32x seems to be fairly priced. So, we suggest our investors “Subscribe” to this IPO for the long term.”
Analysts at GEPL Capital have a positive view on the prospects of Concord Biotech. “Concord’s strong global presence in various therapeutic areas positions it favorably to take advantage of industry growth opportunities. The immunosuppressant API portfolio is projected to continue being a significant driver of the API business in the coming times. Furthermore, the R&D team’s ongoing efforts to develop new formulations, with plans to seek ANDA approvals from the USFDA, indicate potential future growth. Considering Concord’s impressive global reach, diversified product portfolio, strong in-house R&D capabilities, and experienced management team, we recommend “Subscribe” rating to the issue for listing gains,” said its research report.
Concord Biotech IPO Recommendation: Not Everybody is Impressed
Backed by Rakesh Jhunjhunwala’s RARE Enterprises, Concord Biotech has a shot in the arm, but analysts have raised some concerns as well.
SMC Global offered 2 stars to the public offer while stating the following risk factors:
- Significant import dependency (94.18% from China) for raw materials in the last three fiscals.
- A significant amount of the company’s revenue is based on a small number of consumers. The top five customers accounted for 33.82% of revenue in the past three fiscals.
- Regulatory risk in both domestic and international markets due to a highly regulated industry.
- As the company derives a significant portion of its revenue from exports, it is subject to risks associated with exchange rate fluctuations.
BP Wealth has a negative view of Concord Biotech IPO on the valuation front. “The company has a track record of sustained revenue growth which rose at a CAGR of 17.6% during the FY21-23 period. On the upper price band, the issue is valued at a P/E of 32.2x based on FY2023 earnings which we feel is richly valued, as it is higher than other industry API players such as Suven Pharma, Laurus Labs, and Glenmark Lifesciences. It is interesting to note that the entire IPO issue is by way of an OFS and no fund is being received by the company. We, therefore, recommend an “Avoid” rating for the issue,” opined the brokerage house’s research team in its Concord Biotech IPO Recommendation.
Nevertheless, it is quite clear that most brokerage houses have sounded positive notes in Concord Biotech IPO Ratings. According to the data collected by IPO Central from the grey market, the offer is not only actively traded but is also commanding a healthy premium indicating a positive listing.