IPO listed on 13 May'24
Indegene Ltd
Minimum Investment
₹ 14,916 / 33 shares
Grey market premium
₹ 262 (58% premium)
Issue price
₹ 452
Listing price
₹ 655
Listing gains
203 (45%)
Listing on
May 13, 2024
Our Verdict:
Subscribe
- Indegene Ltd has exhibited consistent growth in revenue and profits over the past three years, buoyed by impressive operating margins and return metrics (Return on Equity: 25%).
- From a valuation standpoint, the IPO appears fully priced with a Price-to-Earnings (P/E) multiple of 33.5x, calculated against projected FY24 earnings post-IPO. Nevertheless, considering the firm’s unique business model and near-monopoly status, the IPO is reasonably valued.
- Positioned at the convergence of healthcare and technology, the firm has carved out a distinctive niche in its operational verticals, primarily serving the life sciences industry. This sector is anticipated to witness a CAGR of ~6.5%, reaching Rs 15.5 trillion ($201 billion) by 2026, driven by factors such as an aging population, a surge in chronic diseases, and ongoing discoveries of new ailments.
- In light of these considerations, it is advisable to subscribe to this IPO from a long-term perspective.
About the company
Founded in
16 Oct'98
Managing director
Manish Gupta
- Indegene Ltd offers digital-driven commercialization services tailored to the life sciences sector, encompassing biopharmaceuticals, emerging biotech, and medical devices enterprises. Its support spans drug development, clinical trials, regulatory submissions, pharmacovigilance, complaint management, and sales and marketing efforts.
- The firm delivers a comprehensive suite of solutions addressing the commercial, medical, regulatory, and R&D needs of life sciences firms. This empowers them to streamline product development, market launches, and sales strategies across the product lifecycle, leveraging modern and efficient approaches.
STRENGTHS
- Established Market Presence: Indegene has cultivated strong relationships with the top 20 largest biopharmaceutical companies worldwide. With an exceptional focus on international markets, the company derives nearly 98% of its revenue from global operations, solidifying its specialized position within its served industry verticals.
- High Retention Rates: Indegene boasts impressive retention rates, reflected in figures of 123%, 160%, and 130% for Fiscals 2023, 2022, and 2021 respectively. This underscores its ability to consistently maintain and grow revenue from existing clients.
- Remarkable Financial Growth: Indegene exhibits robust and consistent financial growth, achieving a Compound Annual Growth Rate (CAGR) of 54% in operational revenue from FY21 to FY23. Additionally, there's been a notable 31% increase in EBITDA and a 20% rise in net profit.
- Healthy Profitability Margins: Indegene demonstrates strong profitability margins, boasting an EBITDA margin of 19.69% and a net profit margin of 11.54% as of FY23, indicative of sound financial health and operational efficiency.
- Growth in Active Clientele: Indegene has experienced a significant growth trajectory in its active clientele, with the number of active clients escalating at a CAGR of 19% from 44 in FY21 to 62 in FY23, highlighting its expanding market reach and appeal.
RISK FACTORS
- Revenue Concentration: Indegene derives a notable portion of its revenue from a select group of large clients situated in North America and Europe. In 9M FY 2024, the top five customers contributed 47.76% to the total revenue. Any reduction in the scale of these clients or failure to retain them could have adverse effects on the company's financial performance. Additionally, reliance on such clients exposes the firm to exchange rate fluctuations and potential geopolitical tensions.
- Dependency on Subsidiaries: A significant portion of Indegene’s revenue (92.8% in FY23) is generated through its subsidiaries. Any disruptions in the operations of these subsidiaries could negatively impact the company's business, financial position, and operational results.
- Credit Exposure: Indegene's business model involves providing credit to clients for the solutions it offers, thereby exposing it to counterparty credit risk. This includes the risk of significant delays in receiving payments or non-receipt of payments altogether. As of 9M FY2024, its billed trade receivables amounted to Rs 638.34 crore, representing 33% of the revenue for that period.
Financials
Issue details
Issue type
Mainstream
Issue size
₹ 1,841.76 crore
Fresh Issue
₹ 760 crore
OFS
₹ 1,081.76 crore
Price range
₹ 430 - 452
Lot size
33 shares
Issue Objective
The net proceeds from the fresh issue are intended to be utilised towards:
- Repayment or prepayment of the debt availed by a subsidiary;
- Covering the capital expenditure needs of the company and its subsidiary;
- Supporting inorganic growth and other general corporate purposes.
Dates
Bidding open
6 May'24
Bidding close
8 May'24
Allotment date
9 May'24
Refund date
10 May'24
Listing
13 May'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2024 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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