Indegene IPO opens today: Should you subscribe to the issue?

The initial public offering (IPO) of Indegene opened for bidding today (Monday, May 6) and can be subscribed till Wednesday, May 8. The company will be offering its shares in the range of Rs 430-452 apiece. Investors can apply for a minimum of 33 equity shares and its multiples thereafter.
 

Since 1998, Indegene has provided digital services for the life sciences industry. The company assists with drug development, clinical trials, regulatory submissions, pharmacovigilance, complaints management, and more. It provides enterprise commercial solutions; omnichannel activation enterprise medical solutions; enterprise clinical solutions and consultancy services.
 

The Rs 1,841.76 crore IPO includes a fresh share sale of Rs 760 crore and an offer-for-sale (OFS) of up to 2,39,32,732 equity shares by its promoters and existing equity shareholders. Indegene has reserved shares amounting to Rs 12.5 crore for its eligible employees, who will get a discount of Rs 30 per share.
 

Ahead of its IPO, Indegene raised a total of Rs 548.78 crore from anchor investors by allocating them 1,21,41,102 equity shares at Rs 452 apiece. Marquee investors Smallcap World Fund, Abu Dhabi Investment Authority, American Funds Insurance, Custody Bank of Japan, Destinations International Equity Fund, and others participated in the anchor book.
 

The net proceeds for the issue shall be utilized towards repayment/prepayment of indebtedness of one of the material subsidiaries, ILSL Holdings; funding the capital expenditure requirements of the company; and general corporate purposes and inorganic growth. Anchor book for the issue opens on Friday, May 3.
 

Indegene reported a net profit of Rs 241.90 crore with a revenue of Rs 1,969.75 crore for the nine months ended on December 31, 2023. For the year ended on March 31, 2023, the company's net profit came in at Rs 266.10 crore with a revenue of Rs 2,364.10 crore.
 

The company has reserved a 50 per cent of the net offer for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) shall be allocated 15 per cent of the net offer. Retail investors can apply for the remaining 35 per cent of the net offer reserved for them.
 

Kotak Mahindra Capital Company, Citigroup Global Markets India, JP Morgan India and Nomura Financial Advisory and Securities (India) are the book running lead managers of the Indegene IPO, while Link Intime India is the registrar for the issue. of the company shall be listed at both BSE and NSE on May 13, Monday. Here's what host of brokerage firms say about Indgene IPO:
 

Anand Rathi Research
Rating: Subscribe
Indegene provides services for the life sciences industry. They assist with drug development, clinical trials, regulatory submissions,  pharmacovigilance, complaints management, and sales/marketing support. The company has a proven track record of creating value through strategic acquisitions, said Anand Rathi Research.
 

"With a global footprint and delivery centers strategically located around the world, it offers support to clients on a global scale. This enables flexible collaboration, efficient project execution, and timely delivery of services across different regions. The company is valued at P/E of 40.6 times with a market cap of Rs 1,081.4 crore post issue," it added with a 'subscribe' rating.
 

Reliance Securities
Rating: Subscribe
Indgene is one of the innovative companies in the life sciences industry with more than two decades of experience and has healthcare domain expertise and fit-for-purpose technology with a portfolio of solutions covering all aspects of commercial, medical, regulatory, and R&D operations of life sciences companies, said Reliance Securities.
 

"The management is adopting a prudent strategy of diversifying revenues with a major thrust on exports with a high margin product mix going forward and higher share of business from in enterprise medical solutions IL global delivery model and motivated talent pool supported by marquee investors helps to serve their clients effectively across the regions adopting organic and inorganic growth in the coming years," it added with a subscribe rating on the issue.
 

SBICap Securities
Rating: Subscribe
Indegene is valued at annualized FY24 P/E multiple of 30.5 times based on the upper price band on the post-issue capital. It operates with a unique business model with a strategic client relationship with 20 of the top 20 global pharmaceutical companies in FY23. It is expected to become a net debt free post issue, said SBICap Securities with a 'subscribe' call on the issue.
 

SMIFS
Rating: Subscribe
Indegene will benefit from Life Sciences expenditure which was estimated at Rs 11.3 lakh crore in 2021 which is expected to grow at a CAGR of 6.3 per cent to reach Rs 14.4 lakh crore in 2025. Indegene has already penetrated this segment through its Enterprise Commercial Solutions and derived Rs 1,016.16 crore or 61.04 per cent of its revenue from this segment, said SMIFS.
 

"We believe the outsourcing should services by the pharma companies should grow at a much faster rate than the pharma sector and within pharma - biopharma should continue to outpace general pharma industry growth and this along with debt repayment and the capex should yield very healthy growth, hence we recommend to subscribe to the issue," it said.
 

Swastika Investmart
Rating: Subscribe
Indegene is a provider of digitally guided commercialization services for the life sciences sector, catering to the sales of medical devices, pharmaceuticals, and fledgling biotech enterprises and product marketing. Indegene has established client relationships with each of the 20 largest pharmaceutical companies in the world, said Swastika Investmart.
 

"The financial performance reflects consistent growth over the past three fiscal years, supported by a robust client base of 65 active clients as of December 31, 2023. The company possesses a well-developed technology portfolio, further solidifying its digital capabilities. While the P/E valuation of 37.79 times appears reasonable," it added with a 'subscribe' tag for long term and listing gains.
 

StoxBox
Rating: Subscribe
"The improvement in operational performance is anticipated to be driven by strengthening their go-to-market approach through deepening relationships with existing clients, establishing new client relationships, strengthening new market segments, focusing on high-value opportunities, and scaling promising business verticals," said StoxBox with a 'subscribe' rating for the IPO.
 

Indsec Research
Rating: Subscribe
Indegene has grown its revenue, Ebitda and profit at a CAGR of 54 per cent, 31 per cent and 20 per cent, respectively over FY21-23. The company has completed a total of 13 acquisitions, reaping strong synergies from them It has an established client relationships with each of the 20 largest biopharma companies in the world coupled with 65 active client bases, said Indsec Research.
 

"We thus believe as the global pharma companies focus on increased drug discovery and ramp up of new molecules, the addressable market for Indegene is poised to grow at a healthy pace. We thus like Indegene due to its specialized global healthcare driven business model, superior management expertise and healthy balance sheet," it said with a 'subscribe' tag.

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