Triple-digit CAGR pharma player hits the market: Should you invest?
Between FY22 and FY24, the company recorded a Compound Annual Growth Rate (CAGR) of around 285 per cent in revenue and 472 per cent in net profit.
About the Issue:
Senores Pharmaceuticals Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. See the issue details below.
| IPO Details |
| IPO Opening Date |
December 20, 2024 |
| IPO Closing Date |
December 24, 2024 |
| Issue Type |
Book Built Issue IPO |
| Face Value |
Rs 10 per equity share |
| IPO Price |
Rs 372 to Rs 391 per equity share |
| Min Order Quantity |
38 shares |
| Listing At |
BSE, NSE |
| Total Issue |
1,48,87,723 shares of FV Rs 10* |
| (Aggregating up to Rs 582.11 Cr)* |
| Fresh Issue |
1,27,87,723 shares of FV Rs 10* |
| (Aggregating up to Rs 500.00 Cr)* |
| Offer for Sale |
21,00,000 shares of FV Rs 10* |
| (Aggregating up to Rs 82.11 Cr)* |
| QIB Shares Offered |
75% of the Offer |
| Retail Shares Offered |
10% of the Offer |
| NII (HNI) Shares Offered |
15% of the Offer |
| *At Upper Price Band |
|
Objects of the Issue
The offer encompasses both the fresh issue and the offer for sale. It's important to note that the company will not accrue any proceeds from the offer for sale. The company plans to allocate the net proceeds raised from the fresh issue for the following purposes:
1. Investment in one of the subsidiaries, Havix Group, Inc. d/b/a Aavis Pharmaceuticals, to fund capital expenditure requirements for setting up a manufacturing facility for the production of sterile injections in the Atlanta Facility
2. Repayment/pre-payment, in full or in part, of certain borrowings availed by the company
3. Investment in the subsidiary, namely, Havix, for re-payment/pre-payment in whole or part of certain borrowings availed by such subsidiary
4. Funding the working capital requirements of the company
5. Investment in the subsidiaries, namely, Senores Pharmaceuticals Inc and Ratnatris Pharmaceutical Pvt Ltd to fund their working capital requirements
6. Funding inorganic growth through acquisition and other strategic initiatives and general corporate purposes.
Promoter holding
Swapnil Jatinbhai Shah and Ashokkumar Vijaysinh Barot are the promoters of the company. The promoters currently hold a pre-issue shareholding stake of 23.39 per cent in the company.
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Company profile
The company is a global, research-driven pharmaceutical company specializing in the development and manufacturing of a diverse range of pharmaceutical products. It predominantly serves the regulated markets of the US, Canada, and the United Kingdom, catering to various therapeutic areas and dosage forms. Additionally, it has established a strong presence in emerging markets across 43 countries.
The company’s regulated markets business operates through two key subsidiaries:
- Havix: Houses a US FDA-approved oral solid dosage (OSD) manufacturing facility in Atlanta, US.
- SPI: A US-based entity managing intellectual property related to ANDA approvals and handling agreements with marketing partners.
The company collaborates with leading pharmaceutical players in regulated markets, including Prasco LLC, Lannett Company Inc., Jubilant Cadista Pharmaceuticals Inc., Alkem Laboratories Limited, Sun Pharmaceuticals Industries Limited, Dr. Reddy’s Laboratories Inc., and Cipla USA Inc.
As of September 30, 2024, the company has secured CDMO/CMO contracts for over 40 products with customers across diverse geographies, including the US, Canada, the United Kingdom, South Africa, UAE, Israel, Denmark, Saudi Arabia, and Vietnam, further strengthening its global footprint.
Financials
| Rs (in crore) |
FY22 |
FY23 |
FY24 |
H1FY25 |
| Revenue |
14.63 |
39.02 |
217 |
183.35 |
| Profit Before Tax |
1.14 |
12.44 |
24.94 |
29.4 |
| Net Profit |
1 |
8.43 |
32.71 |
23.94 |
The company has consistently delivered robust growth in both revenue and profits over the past few years. Between FY22 and FY24, the company recorded a Compound Annual Growth Rate (CAGR) of around 285 per cent in revenue and 472 per cent in net profit.
When annualized, the figures from the H1FY25 indicate a 69 per cent revenue growth and a 46 per cent surge in net profit compared to FY24. Senores Pharmaceuticals' robust performance can be attributed to strategic acquisitions, a focus on regulated markets, and consistent investment in R&D.
Valuation & Outlook
| Company Name |
P/E |
P/B |
RoE (%)* |
| Senores Pharmaceuticals Ltd |
27 |
2 |
24 |
| Listed Peers |
| Ajanta Pharma Ltd |
41 |
10 |
23 |
| Alembic Pharmaceuticals Ltd |
32 |
4 |
12 |
| Caplin Point Laboratories Ltd |
37 |
7 |
23 |
| Gland Pharma Ltd |
42 |
3 |
9 |
| Strides Pharma Science Ltd |
28 |
3 |
- |
*RoE: Based on FY24 data
The issue is priced with a P/BV ratio of 4.46 times, calculated using its Net Asset Value (NAV) of Rs 87.63 as of September 30, 2024. At the upper price cap, it is priced at a P/BV ratio of 2.3 times, considering its post-IPO NAV.
Considering the company's annualized FY25 earnings and fully diluted equity capital, the price-to-earnings (P/E) ratio stands at 27x. The company delivered an impressive return on equity (RoE) of 24 per cent and a return on capital employed (RoCE) of 12 per cent for FY24.
As a result, the company has outperformed its listed peers in terms of both valuation and returns.
Considering the company's strong presence in both regulated and emerging markets, long-term marketing agreements with leading pharmaceutical firms in the US, Canada, and the United Kingdom, along with its proven financial track record and promising growth potential, we recommend investors subscribe to the issue with a long-term perspective.