IPO listed on 18 Dec'24
Sai Life Sciences Ltd
Minimum Investment
₹ 14,823 / 27 shares
Grey market premium
₹ 72 (13% premium)
Issue price
₹ 549
Listing price
₹ 650
Listing gains
101 (18%)
Listing on
Dec 18, 2024
Our Verdict:
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- Sai Life Sciences Ltd (SLSL) has demonstrated impressive growth in revenue and earnings in recent years. Additionally, the planned repayment of debt using IPO proceeds will significantly reduce finance costs, enhancing profitability in the future.
- SLSL has a diverse client base, serving 18 of the top 25 pharma companies across regulated markets such as the US, UK, EU, and Japan. The number of top 25 global pharma clients serviced has doubled from 9 in FY19 to 18 in FY24, reflecting the company’s robust capabilities.
- The $250 billion global CRDMO (contract research, development, and manufacturing organization) market is expected to grow at a 13% CAGR through FY27. While global CDMO players are shifting focus to large molecules, Indian firms are seizing opportunities in the small molecule CRDMO segment, driven by cost-efficient manufacturing, increasing FDI, and supportive government initiatives like the PLI scheme. Additionally, the US's diversification efforts away from China present further growth potential for India’s CDMO sector.
- From a valuation standpoint, the IPO appears to be aggressively priced with a price-to-earnings (P/E) ratio of 120x based on FY24 earnings. Although the stretched valuation may constrain short-term upside, the company's solid performance and strong industry tailwinds make it a good investment opportunity for long-term investors.
About the company
Founded in
25 Jan'99
Managing director
Krishnam Raju Kanumuri
- SLSL is a contract research, development, and manufacturing organization (CRDMO) that specializes in delivering end-to-end solutions for drug discovery, development, and manufacturing. Focused on small molecule new chemical entities (NCEs), it partners with global pharmaceutical innovators and biotechnology firms.
- SLSL’s CRO services offer integrated discovery capabilities in biology, chemistry, and drug metabolism and pharmacokinetics (DMPK). Over the past five years, it has successfully supported 200+ small molecule discovery programs. Its CDMO services provide comprehensive solutions to assist customers in developing and scaling up the production of active pharmaceutical ingredients (APIs) and intermediates, catering to both clinical and commercial phase supplies.
STRENGTHS
- Comprehensive CRDMO Expertise: SLSL is one of India’s largest integrated CRDMOs by revenue in FY24, offering end-to-end solutions from discovery to commercialization. It stands out with a unique delivery model, featuring research laboratories for discovery and development strategically located near innovation hubs in the US and UK, while leveraging large-scale research labs and manufacturing facilities in cost-efficient locations in India.
- Diversified Portfolio and Customer Base: SLSL serves a wide range of clients across commercial, late-stage, and early-stage CMC molecules, as well as discovery programs. Its diverse client base includes 18 out of the top 25 pharmaceutical companies across the regulated markets of the US, the UK, EU and Japan.
- Exceptional Growth: SLSL reported outstanding growth, with operational revenue, EBITDA, and net profit achieving compounded annual growth rates (CAGRs) of 30%, 51%, and 265%, respectively, between FY22 and FY24.
- Improving Financial Metrics: Net profit margins improved significantly, rising from 0.72% in FY22 to 5.65% in FY24. Similarly, the Return on Equity (RoE) increased from 0.71% to 8.49%, while the Return on Capital Employed (RoCE) grew from 3.21% to 10.26% over the same period.
RISK FACTORS
- Geographic Concentration: A substantial 97% of SLSL's revenue comes from international markets, making the company vulnerable to risks such as currency fluctuations, regulatory changes, and geopolitical uncertainties in those regions.
- Client Concentration: The top 10 customers accounted for 43.45% of the operating revenue for the six-month period ending September 2024. The loss of any major customer or large contract could significantly impact the firm’s business, financial condition, and operational results.
- Subsidiary Losses: SLSL’s subsidiary, Sai Life Sciences Inc, has reported losses in the past. Any continued or future losses could adversely impact the overall business performance.
- Legal Proceedings: SLSL, its directors, and promoters are involved in ongoing legal cases, including criminal proceedings, amounting to Rs 239 crore. An unfavourable outcome in any of these cases could negatively impact the company’s operations.
Issue details
Issue type
Mainstream
Issue size
₹ 3,042.62 crore
Fresh Issue
₹ 950 crore
OFS
₹ 2,092.62 crore
Price range
₹ 522 - 549
Lot size
27 shares
Issue Objective
SLSL intends to utilise the net proceeds from the fresh issue for:
- Repayment/ prepayment of certain outstanding borrowings; and
- General corporate purposes.
Dates
Bidding open
11 Dec'24
Bidding close
13 Dec'24
Allotment date
16 Dec'24
Refund date
17 Dec'24
Listing
18 Dec'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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