Syngene International, the contract research services arm of Biocon plans to hit the stock market with their Initial Public Offering (IPO) to raise Rs 528 to 550 crore on 17th July. The price band for the offer has been fixed between Rs. 240 and Rs. 250 per equity share of Rs 10 each. The minimum bid lot is 60 equity shares and in multiples of 60 equity shares thereafter. The issue size consists of 22,000,000 equity shares and the offer for sale will close on July 29. Biocon, which owns about 85% of Syngene, will reduce its stake to about 74% through the IPO.
The objects of the Issue are to achieve the benefits of listing the Equity Shares on the Stock Exchanges, enhance visibility and brand image among existing and potential clients and to provide liquidity to the existing shareholders.
Syngene provides contract drug discovery, research and manufacturing services to 17 of the world's top 20 pharmaceutical companies, including Bristol Myers Squibb & Co and Abbott Laboratories Ltd. Till Dec 31, 2014, the company serviced 195 clients, ranging from multinational corporations to start-ups, including seven of the top 10 global pharmaceutical companies. Sumgeme's revenue rose 25% in the last three years.
The Issue will be undertaken through the book building process wherein 50% of the net offer shall be allotted to qualified institutional buyers, atleast 15% of the net offer shall be available to non-institutional investors and 35% of the net offer will be available for allocation to retail individual investors.
The Equity Shares being offered are proposed to be listed on the BSE Ltd and the National Stock Exchange of India Ltd.
Axis Capital Ltd, Credit Suisse Securities (India) Pvt Ltd and Jefferies India Pvt Ltd are the book running lead managers to the Issue and Karvy Computershare Pvt Ltd is the registrar to the issue.
"Syngene has showed revenue and earnings CAGR of around 28% & 59% respectively over FY11-15. Considering earnings CAGR to be around 25% over FY15-17E, the stock trades at 18x FY17E at upper price band of Rs 250. We are positive on the business model of Syngene from the long term perspective alongwith the fact that it is the only profitable listed CRO company, it can command a premium multiple. We recommend “Subscribe” to Syngene International IPO", says KRChoksey research report.