Concord Biotech made its debut on the exchanges on Friday, listing at a healthy premium of 21%. The stock listed at Rs 900 on both the NSE and BSE, over the IPO price of Rs 741 per share, a premium of Rs 159. As the trading day progressed, the stock further rallied 9.7% to reach Rs 987, bringing the total gains to over 33%. Analysts are advising investors to book profits, while aggressive investors may consider holding and adding more stake in the company for healthy returns in the long term.
Concord Biotech, a leading API company with a proven track record, manufactures and exports APIs for a wide range of therapeutic areas. However, the company’s international operations expose it to various complex risks. The listing of Concord Biotech was in line with expectations, boosted by the company’s strong fundamentals and good subscription levels during the IPO. Equity research analysts suggest that investors who participated in the IPO should consider booking profits following the listing.
Prashant Tapse, VP-Research at Mehta Equities, stated that conservative allotted investors should book their profits on listing day, while risk takers can continue to hold their positions and even add more for healthy returns in the long term. Tapse also expressed optimism about Concord’s business mix, which is well-positioned in the niche pharma space with leading market share in complex product portfolios, along with strong customer relationships in over 70 countries. The company supplies fermentation-based APIs across immunosuppressants and oncology, holding a significant market share based on volume in 2022.
Concord Biotech is backed by Rakesh Jhunjhunwala’s Rare Enterprises and another leading investment firm, Quadria Capital Fund. The company operates across the entire fermentation value chain and caters to more than 70 countries, including regulated markets such as the US, Europe, Japan, and India.
During the IPO, which was completely an Offer for Sale (OFS), it was oversubscribed by 24.86 times at close. The qualified institutional buyer portion received the highest subscription at 67.67 times, followed by non-institutional investors at 16.99 times, and the retail category at 3.78 times. The IPO offered 2.09 crore equity shares, aggregating up to Rs 1,551 crore, with a price band of Rs 705-741 per share.
Concord Biotech has recorded an 18% compounded annual growth rate (CAGR) in revenue over the period from FY21 to FY23, with an EBITDA margin of 40%. The company has healthy return ratios, with a RoE/RoCE of 20% and 19%, respectively. It has also generated free cash flow over the last two years, with FCF/EBITDA at 29%. In the financial year ended March 2023, the company reported revenues of Rs 888 crore and a profit of Rs 240 crore.
Kotak Mahindra Capital, Jefferies India, and Citigroup acted as the book-running lead managers for the IPO, while Link Intime India served as the registrar.
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