Sai Life Sciences Limited is an innovator-focused, contract research, development, and manufacturing organization ('CRDMO'). They provide end-to-end services across the drug discovery, development, and manufacturing value chain, for small molecule new chemical entities ('NCE'), to global pharmaceutical innovator companies and biotechnology firms. They possess both (a) discovery / contract research ('CRO') and (b) chemistry, manufacturing, and control ('CMC') / contract development and manufacturing organization ('CDMO') capabilities. During the Financial Year 2024 and six months period ended September 30, 2024, they served more than 280 and 230 innovator pharmaceutical companies, respectively, including 18 of the top 25 pharmaceutical companies (in terms of revenue for the calendar year 2023), across regulated markets, including the US, the UK, Europe and Japan. During both the Financial Year 2024 and six months period ended September 30, 2024, they also provided CRO services to more than 60 customers, respectively, on an ongoing basis, for their integrated drug discovery programs. As of September 30, 2024, the CDMO product portfolio included more than 170 innovator pharmaceutical products, including 38 products that were supplied for manufacturing of 28 commercial drugs. As of September 30, 2024, they had 2,353 scientific staff, with majority of the scientific team holding advanced degrees, including 302 PhDs and 1,475 master's degrees. The manufacturing facilities have received several regulatory approvals from the United States Food and Drug Administration ('USFDA'), the Pharmaceuticals and Medical Devices Agency, Japan ('PMDA') and the state level drug control departments which are arms of the Central Drug Standards Control Organization, India ('CDSCO'). As of September 30, 2024, the development and manufacturing portfolio consisted of 38 APIs and intermediates used in the manufacturing of 28 commercial drugs, including seven blockbusters (drug products with annual sales of over US$1 billion in the Financial Year 2023) and 12 products for 11 APIs that were either undergoing or had completed Phase III clinical trials. In addition, the portfolio consists of 120 products in various stages of development across pre-clinical, Phase I and Phase II clinical trial stages. They provide these CMC services through the Unit IV Bidar Facility, Unit II Hyderabad Facility and Manchester Facility. The CMC services are broadly classified as early-phase (pre-clinical to Phase II) and late phase (commercial, Phase III and post-Phase-III products). Their product portfolio and customer base are diversified, encompassing commercial, late-stage and early-stage CMC molecules and discovery programs. As of September 30, 2024, no single customer accounted for more than 8.00% of the revenue from operations. They have strategic presence, located in close proximity to innovation clusters in Boston, US and Manchester, UK. As per financial performance, Sai Life Sciences Limited has posted total income / net profits of Rs 897.74 Cr / Rs 6.23 Cr (FY22), Rs 1,245.11 Cr / 9.99 Cr (FY23), Rs 1,494.27 Cr / Rs 82.81 Cr (FY24) and Rs 693.35 Cr / 28.01 Cr (H1 FY25). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 2.51 and average RoNW of 4.74% for last three fiscals. Issue is priced at a P/BV of 9.82 as per NAV of Rs 55.93/- as on 30.09.24. If we attribute latest earnings of FY23, FY24, TTM and annualised FY25 on equity post issue, then asking price is at a P/E of around 1143, 137.89, 92.28 and 203.82 respectively. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, four lead managers are associated with this IPO, and have handled around 89 IPOs in last three fiscals. ( As on 07.12.24 ) As per financials, Sai Life Sciences Limited has shown good growth, RoNW is 8.5% and P/E is 1143, 137.89, 92.28 and 203.82 respectively as per FY23, FY24, TTM and annualised FY25 earnings. Company has posted good growth, but RoE is low and as per valuations it looks aggressively priced. Company is an innovator-focused, contract research, development, and manufacturing organization ('CRDMO'). This sector is showing sign of improvements and so, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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