Sai Life Science is gearing up to launch its Initial Public Offering (IPO), sparking significant interest among investors. In this Sai Life Sciences IPO analysis, we explore whether it could be a valuable addition to your investment portfolio.
The IPO is scheduled to open for subscription on 11 December 2024 and close on 13 December 2024. As per the company’s red herring prospectus (RHP), the offering will include a fresh issue of INR 950 crore and an offer for sale of 3.82 crore shares worth INR 2,092.62 crore by existing shareholders. The IPO aims to raise INR 3,042.62 crore, with a price band set between INR 522 and INR 549 per share. Investors can place bids in multiples of 27 shares.
The IPO will be managed by leading investment banks including Kotak Mahindra Capital, IIFL Capital, and Jefferies India, Morgan Stanley India with KFin Technologies acting as the registrar. The shares are expected to be listed on both BSE and NSE on 18 December 2024.
Sai Life Science is expected to be listed on BSE and NSE, with the listing on 18 December 2024. Below are some key details about the IPO before we delve further into the analysis.
Table of Contents
Sai Life Sciences IPO Analysis – Details
- Opening Date: 11 December 2024
- Closing Date: 13 December 2024
- Price Band: INR 522 – 549 per share
- Issue Size: INR 3,042.62 crore (comprising a fresh issue of INR 950 crore and an offer for sale of INR 2,092.62 crore)
- Lot Size: Minimum of 27 shares (INR 14,823)
Sai Life Sciences IPO Analysis – Business Overview
Sai Life Sciences is the fastest-growing contract research, development, and manufacturing organization (CRDMO). It is also one of the few CRDMOs to have research laboratories for discovery and development located near overseas innovation hubs at Watertown (Greater Boston, MA), United States (US), and Manchester, United Kingdom (UK), complemented by large-scale research laboratories and manufacturing facilities in cost competitive locations in India.
The company has served more than 280 innovator pharmaceutical companies, including 18 of the top 25 pharmaceutical companies, across regulated markets, including the US, the UK, Europe, and Japan. It also provides CRO services to more than 60 customers on an ongoing basis, for their integrated drug discovery programs. As of 30 September 2024, its CDMO product portfolio included more than 170 innovative pharmaceutical products, including 38 products that were supplied for the manufacturing of 28 commercial drugs.
Read Also: Sai Life Sciences IPO GMP, Price, Date, Allotment
Sai Life Sciences IPO Analysis – Let’s Look Into Financials
Sai Life Sciences has shown impressive financial growth over the past few years. Below are key financial metrics:
| Â | FY 2022 | FY 2023 | FY 2024 | H1 FY 2025 |
| Revenue | 869.59 | 1,217.14 | 1,465.18 | 675.29 |
| Expenses | 888.05 | 1,228.70 | 1385.04 | 656.09 |
| Net income | 6.23 | 9.99 | 82.81 | 28.01 |
| Margin (%) | 0.72 | 0.82 | 5.65 | 4.15 |
The company reported a revenue growth of approximately 20.38% from FY 2023 to FY 2024. The net profit has also seen a massive growth of 729% from the previous year, reflecting effective cost management and operational efficiency. The company also reported a net profit of over INR 28 crore in the first half of the financial year 2025.
Object of Proceeds
- Repayment/ prepayment, in full or part, of all or certain outstanding borrowings availed by the company – INR 720 crore
- General corporate purposes
Sai Life Sciences IPO Analysis – Comparison with Listed Peers
To gauge Sai Life Sciences’ market positioning, we compare its financial metrics with those of similar companies in the sector:
| Company | PE ratio | RONW (%) | Revenue (Cr.) |
| Sai Life Sciences | 203.82 | 8.50 | 1,465.18 |
| Divi’s Laboratories | 103.04 | 11.79 | 7,845.0 |
| Suven Pharmaceuticals | 109.37 | 14.64 | 1,051.35 |
| Syngene International | 73.59 | 11.98 | 3,488.60 |
Sai Life Sciences has a relatively high P/E ratio of 203.82, indicating it may be overvalued compared to its listed peers. The RoNW is 8.50%, trailing behind Divi’s Lab (11.79%) and Suven Pharmaceuticals (14.64%), which is also lower than its industry counterparts. The company’s return on capital is 10.26%.
Sai Life Science IPO Analysis – Shareholding Pattern
| Selling Shareholder | Shares pre-Offer | Shares being offered | Shares post-Offer | % of Shares post-Offer |
|---|---|---|---|---|
| Sai Quest Syn (Promoter) | 1,10,45,880 | 64,54,780 | 45,91,100 | 41.56 |
| TPG Asia VII SF Pte (Investor) | 7,47,07,640 | 2,31,59,368 | 5,15,48,272 | 69.00 |
| HBM Private Equity India (Investor) | 1,03,50,310 | 62,10,186 | 41,40,124 | 40.00 |
| Bharathi Srivari | 8,82,350 | 6,50,000 | 2,32,350 | 26.33 |
| Anita Rudraraju Nandyala | 41,02,370 | 5,00,000 | 36,02,370 | 87.81 |
| Raju Penmasta | 28,09,800 | 5,00,000 | 23,09,800 | 82.21 |
| Dr. Dirk Walter Sartor | 2,50,000 | 2,50,000 | – | – |
| Jagdish Viswanath Dore | 2,45,100 | 2,45,100 | – | – |
| Rajagopal Srirama Tatta | 2,50,000 | 62,500 | 1,87,500 | 75.00 |
| K Pandu Ranga Raju | 1,18,300 | 80,000 | 38,300 | 32.38 |
| Total | 10,47,61,750 | 3,81,11,934 | 6,66,49,816 | 63.62 |
According to the shareholding pattern, Sai Quest Syn is the largest selling shareholder, holding 59.44%. TPG Asia is selling 31% of its stake in the company, while individual investors such as Dr. Dirk Walter and Jagdish Vishvanath Dore are fully exiting the company.
Sai Life Sciences IPO Analysis – Risks
- The subsidiary of the company, Sai Life Sciences Inc., has reported losses amounting to INR 4.56 crore for the six months ending September 30, 2024, and INR 15.06 crore, INR 12.60 crore, and INR 9.31 crore for the financial years 2024, 2023, and 2022, respectively. The subsidiary may continue to incur losses in the future, which could adversely affect the company’s business operations and the value of its equity shares.
- The company has certain contingent liabilities of INR 26 crore, which, if materialized, may affect the company’s business, financial condition and cash flows.
- A portion of the net proceeds of INR 80.8 crore may be utilized for repayment or pre-payment of loans taken from Kotak Mahindra Bank, which is an affiliate of one of the Book Running Lead Managers.
Conclusion
The Sai Life Sciences IPO presents an attractive investment opportunity for those looking to enter the growing pharmaceutical sector. With a solid financial foundation, strategic market positioning, and positive industry trends, it could be a valuable addition to an investment portfolio. However, investors should conduct thorough research and consider their risk tolerance before participating in this IPO.