Sai Life Sciences IPO Day 1 Live Updates: Issue subscribed 84% on first day; QIB portion fully booked; check latest GMP

At the close of the first day of the bidding process, the Sai Life Sciences IPO was subscribed 84%, driven by strong demand from institutional investors. The QIB portion was oversubscribed by 2.62 times, while the NII portion received 15% subscription. The retail portion garnered 18% of the total bids.

The global pharmaceutical market was valued at USD 1,451 billion in 2023 and is projected to reach USD 1,956 billion by 2028, growing at a CAGR of 6.2% from 2023 to 2028. This growth is primarily attributable to factors like the increasing incidence of chronic diseases, sedentary lifestyles leading to diseases, and increased health consciousness among people. The aging population is also an amplifying factor driving demand. According to WHO, from 2015 to 2050, the percentage of the global population over 60 years will nearly double from 12% to 22% and is anticipated to reach approximately 2.1 billion by the year 2050.

Sai Life Sciences IPO was subscribed 84% so far on Day 1. QIB portion was booked 2.62 times, NII portion was subscribed 16% and retail portion 18%.

As per Sai Life Sciences RHP, the company's top 5 customers account for 31% of the revenue and its top 10 customers for 46% of the revenue. 

The company plans to raise Rs. 950 cr, out of which Rs. 720 cr will be used for the repayment of borrowings. We are confident in the industry's growth with a structural shift due to supply chain diversification by the US, irrespective of the passing of the Biosecure Act. The prospects of Sai Life Sciences are aligned to capture this opportunity, and we recommend SUBSCRIBING FOR LONG-TERM to the IPO.

Sai Life Sciences IPO was subscribed 75% so far on the first day of the bidding process on Wednesday. The issue received bids for 2,92,13,433 shares as against 3,88,29,848 shares on offer. Here's how different categories were booked:

QIB: 2.40 times

NII: 9%

Retail Investors: 14%

Overall: 75%

Dependency on Key Customers: A significant portion of revenue comes from top clients, making the business vulnerable to changes in sourcing strategies.

Limited Therapeutic Diversification: Despite expanding capabilities, reliance on specific therapeutic areas may limit broader market penetration.

Regulatory Dependencies: Operations are subject to stringent global regulations, which can affect timelines and cost structures.

“The issue is priced at a P/E of 121.2x at the upper price band based on FY24 earnings. While the valuation appears high, the company’s strong performance and favourable industry trends make it a promising opportunity for medium to long-term investors. Therefore, we recommend a “SUBSCRIBE” rating for this issue,” BP Wealth said.

The company plans to utilise net proceeds for repayment/prepayment, in full or part, of all or certain outstanding borrowings availed by our Company; and general corporate purposes.

Sudden buying from QIB investors, pushed Sai Life Sciences IPO subscription close to the halfway mark. Sai Life Sciences IPO's QIB portion sailed through, with the quota subscribed 1.37 times as of 1.58 pm on Wednesday. Overall, the IPO was booked 46%. 

The company is valued at FY24 P/E and EV/EBITDA multiples of 137.9x and 38.6x respectively, based on the upper price band on the post-issue capital. Sai Life Sciences is one of the largest integrated CRDMOs in India among listed peers and has established capabilities across the discovery, drug development, and commercial manufacturing value chain. Although the company may seem slightly overvalued compared to its closest peer, it has delivered Revenue/EBITDA/PAT CAGR of 29.8%/53.4%/264.7% respectively between FY22-FY24. Further, repayment of debt from the proceeds of the issue will reduce finance costs by ~ ₹56 cr, thus augmenting profitability going forward. We recommend subscribing to the issue for a long-term investment horizon.

Within the first three hours of the IPO bidding process, Sai Life Sciences IPO was subscribed 6% so far. Here's how different quotas were booked:

QIB: NIL

NII: 6%

Retail Investor: 10%

Overall: 6%

"The company discovers, develops, and manufactures small molecule new chemical entities. Its financial performance has been positive with a sharp rise in profitability. A high proportion of OFS, with limited direct benefits to the company. The IPO is significantly overvalued. Given the high valuation and limited direct benefits to the company from the IPO, a cautious approach is recommended," said Swastika while recommending a 'neutral' rating on the IPO.

The company's revenue from the contract research segment was ₹497.2 crore in FY24, contributing 34% to overall revenue while the contract development and manufacturing segment accounted for 66% of the FY24 revenue at ₹971.6 crore.

Sai Life Sciences operates as a fully integrated Contract Research, Development, and Manufacturing Organization (CRDMO), supporting global pharmaceutical innovators.

The company’s business model provides comprehensive solutions throughout the drug development lifecycle for New Chemical Entities (NCEs). It is based on two primary revenue models:

Fee-for-Service (FFS): Revenue is earned by manufacturing and supplying APIs or intermediates according to client orders or long-term agreements.

Full-Time Equivalent (FTE): Dedicated resources are assigned to specific client projects, with monthly billing based on resource usage and pass-through costs.

This model prioritizes scalability, customization, and innovation, helping clients navigate the drug development process efficiently and cost-effectively.

Within the first two hours of bidding, Sai Life Sciences IPO garnered 5% bids, suggesting soft demand for the public issue. Here's how different quotas were subscribed:

QIB: NIL

NII: 4%

Retail investors: 8%

Overall: 5%

Promoters of Sai Life Sciences & the equity held by them

• Kanumuri Ranga Raju
• Krishnam Raju Kanumuri
• Kanumuri Mytreyi
• Sai Quest Syn Private Limited
• Marigold Partners
• Sunflower Partners
• Tulip Partners
• Lily Partners
   

Here are the shareholders who are offloading stake in the IPO:

• Sai Quest Syn Private Limited is selling up to 6,454,780 equity shares
• TPG Asia VII SF Pte Ltd is selling up to 23,159,368 equity shares
• HBM Private Equity India is selling up to 6,210,186 equity shares
• Bharathi Srivari is selling up to 650,000 equity shares
• Anita Rudraraju Nandyala is selling up to 500,000 equity shares
• Raju Penmasta is selling up to 500,000 equity shares
• Dr. Dirk Walter Sartor is selling up to 250,000 equity shares
• Jagdish Viswanath Dore is selling up to 245,100 equity shares
• Rajagopal Srirama Tatta is selling up to 62,500 equity shares
• K Pandu Ranga Raju is selling up to 80,000 equity shares

Within the first hour of bidding on Day 1, Sai Life Sciences IPO was subscribed 2%. Here's the subscription status for different categories:

QIB: NIL
NII: 2%
Retail Investors: 4%
Overall: 2%

Sai Life Sciences Limited is a globally recognized Contract Research, Development, and Manufacturing Organization (CRDMO) offering integrated services across drug discovery, development, and manufacturing, with a strong presence in regulated markets like the US, UK, and Europe. The company benefits from a robust product pipeline, serving over 280 clients, including 18 of the top 25 global pharmaceutical firms. However, its significant reliance on key clients, limited diversification across treatment areas, and high infrastructure costs pose risks to sustained profitability.

With a P/E multiple of 138x, the valuation appears stretched compared to peers in the industry. This premium valuation, coupled with operational risks and margin pressures, limits its investment attractiveness despite growth potential in the global CRDMO market. Therefore, we assign an “AVOID” rating.

Sai Life Sciences IPO is a mix of fresh issue and offer for sale. The IPO consists of fresh shares of up to ₹950 crore and OFS of 38,116,934 equity shares, shows the company's RHP.

The retail investors started to bid for Sai Life Sciences IPO on the first day of the bidding process on Wednesday. The IPO was subscribed 1% in the retail category within 15 minutes of opening.

Sai Life Sciences IPO opened for bidding at 10 am today. Investors can start placing bids for the issue from today onwards till December 13.

• Sai Life Sciences IPO open date: December 11
• Sai Life Sciences IPO close date: December 13
• Sai Life Sciences IPO allotment date: December 16
• Initiation of refunds: December 17
• Credit of shares: December 17
• Sai Life Sciences IPO listing date: December 18

Sai Life Sciences raised ₹913 crore from anchor investors ahead of its initial public offering (IPO). Among the investors are entities like INQ Holding LLC, SmallCap World Fund Inc, Fidelity Funds, Abu Dhabi Investment Authority, Goldman Sachs Funds, BlackRock, and major mutual funds such as Nippon India MF, HDFC MF, Axis MF, and Kotak Mahindra MF, as reported in a BSE circular. The company has allocated over 1.66 crore equity shares to 63 funds at ₹549 per share, the upper limit of the price band, bringing the total value of the transaction to ₹913 crore.

Sai Life Sciences IPO GMP today is +31. This indicates Sai Life Sciences share price was trading at a premium of ₹31 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Sai Life Sciences share price is indicated at ₹580 apiece, which is 5.65% higher than the IPO price of ₹549.

Based on the grey market activities from the last six sessions, the current GMP ( ₹31) indicates a potential decline. The minimum GMP recorded is ₹22, while the maximum stands at ₹42, as per the experts at investorgain.com.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.