Senores Pharmaceuticals IPO: Check date, price band, business model and other key details

Senores Pharmaceuticals Ltd is set to launch its initial public offering (IPO) this week on Friday, December 20.

Senores Pharmaceuticals IPO is a 100% book-built issue comprising a fresh issuance of shares worth ₹500 crore and an offer-for-sale (OFS) of 21 lakh shares.

Subscription for the mainboard issue will close on Tuesday, December 24. The share allotment is expected to be finalised on Thursday, December 26.

Shares of Senores Pharmaceuticals are expected to be listed on the BSE and the National Stock Exchange of India (NSE) on December 30.

If you are planning to subscribe to the Senores Pharmaceuticals IPO, here are some key details that you should know:

Senores Pharmaceuticals IPO: Price band and lot size

The company aims to raise up to ₹581.11 crore through the maiden share sale.

The IPO price band has been fixed at ₹372 to ₹391 per share. For the retail investors, the minimum bid quantity is 38 shares and in multiples thereof. The retail investors can bid for at least a single lot size of 38 shares, aggregating to ₹14,858.

The company has set aside 75% of the offer size for the Qualified Institutional Buyers (QIBs). The company will offer 15% of shares to the Non-Institutional Investors and 10% to the retail investors.

Equirus Capital Pvt. Ltd, Ambit Pvt. Ltd, Nuvama Wealth Management Ltd are the book running lead managers of the IPO. The issue registrar is Link Intime India Pvt. Ltd.

Business Model

Senores Pharmaceuticals Ltd is a global research-driven pharmaceutical company engaged in developing and manufacturing a wide range of generic pharmaceutical products in the B2B (business-to-business) segment, predominantly for the regulated markets.

Its regulated markets business is primarily focused on the regulated markets of US, Canada, and UK. Senores Pharmaceuticals also develops and manufactures generic pharmaceutical products across various therapeutic areas for the emerging markets in the B2B segment, having a presence across 43 countries.

The company also operates a critical care injectables business, supplying critical care injectables to hospitals across India through distributors, and manufactures active pharmaceutical ingredients (APIs) for the domestic market and SAARC countries.

Strengths

• The company’s biggest strength is its ability to cater to the regulated markets of the United States, Canada and the United Kingdom through its USFDA-approved formulation manufacturing facility in the US.
• Its long-term marketing arrangements with pharmaceutical companies in the regulated markets of US, Canada and the UK are also a big positive for the company.

Weaknesses

• Failure to comply with the quality standards and technical specifications prescribed by its customers may lead to loss of business and could negatively impact operations.
• The company has had negative cash flows from operating activities in the last three fiscal years and may continue to have negative cash flows in the future.
• Two of its three manufacturing facilities are concentrated in one state (Gujarat) and any adverse developments affecting this region could have an adverse effect on its business.

Competitors

The domestic and international pharmaceutical industry is highly competitive with several major pharmaceutical companies present. Its competition includes full-service pharmaceutical companies, CDMOs (contract development and manufacturing organisations) and CMOs (contract manufacturing organisations) focusing on a limited number of dosage forms, multiple dosage forms; and large pharmaceutical companies offering third-party manufacturing services to utilize their excess capacity. These include Cipla, Dr. Reddy’s Laboratories, Aurobindo Pharma, Biocon, Cadila Healthcare, Piramal Pharma, Sun Pharmaceutical Industries, Alkem Laboratories, Lupin, among others.

Key financials

Use of IPO proceeds

The company proposes to utilise the net proceeds from the IPO in one of its subsidiaries, Havix Group Inc. to fund capital expenditure requirements for setting up a manufacturing facility for the production of sterile injections in its Atlanta facility. A portion of the funds will also be used for repayment or prepayment of loans by its subsidiary. The company also plans to invest IPO proceeds in its subsidiaries, Senores Pharmaceuticals Inc. and Ratnatris Pharmaceutical Pvt. Ltd, to fund their working capital requirements.