Indegene IPO subscribed 3.57 times on Day 2 so far; NII portion booked over 8.5x

The initial public offering (IPO) of Indegene saw a strong response from the investors during the second day of the bidding process. After being subscribed 1.67 times, thanks to the buying interest across all categories of the investors, particularly the HNI investors.

The Bengaluru-based Indegene is selling its shares in the price band of Rs 430-452 apiece. Investors can apply for a minimum of 33 shares and its multiples thereafter. It is looking to raise Rs 1,841.76 crore via IPO, which includes a fresh share sale of Rs 760 crore and an offer-for-sale (OFS) of 2,39,32,732 equity shares.

According to the data, the investors made bids for 10,29,93,264 equity shares, or 3.57 times, compared to the 2,88,66,677 equity shares offered for the subscription by 12.35 pm on Tuesday, May 07. The three-day bidding for the issue will conclude on Wednesday, May 08.

The allocation for retail investors was subscribed 2.62 times, while the portion reserved for non-institutional investors saw a subscription of 8.53 times. However, the quota set aside for qualified institutional bidders (QIBs) attracted bids for 1.46 times of their reservation, while employee quota was booked 2.35 times as of the same time.

Indegene has provided digital services for the life sciences industry. The company assists with drug development, clinical trials, regulatory submissions, pharmacovigilance, complaints management, and more. It provides enterprise commercial solutions; omnichannel activation enterprise medical solutions; enterprise clinical solutions and consultancy services.

The grey market premium of Indegene has remained firmed after the first day of the bidding. Last heard, the company was commanding a premium of Rs 255-260 in the unofficial market, suggesting a listing pop of about 55-56 per cent for the investors. However, the premium in the grey market stood around Rs 240, before the bidding opened for the issue.

Brokerage firms are mostly positive on the issue citing its niche business model, strong financials, robust growth prospects and long-term relationship with leading biopharma players. However, dependence of subsidiaries from revenues, loss of clients, more competition and rich valuations are some concerns for the company.

Indegene aims to drive efficiency, effectiveness and quality in various aspects of the R&D and commercialization processes of life sciences companies. They have long - standing relationships with marquee biopharmaceutical companies including each of the 20 largest pharmaceutical companies in the world, said Mahesh M Ojha, AVP - Research at Hensex Securities.

"The company also endeavors to add more companies from the medical devices and emerging biotech industries to their client base by leveraging the existing capabilities, expertise and experience. The company however is a good pick for Thematic investors focused in the pharma sector, " he added, suggesting a 'subscribe' rating for a long-term perspective.

Ahead of its IPO, Indegene raised a total of Rs 548.78 crore from anchor investors by allocating them 1,21,41,102 equity shares at Rs 452 apiece. It has reserved a 50 per cent of the net offer for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) shall be allocated 15 per cent of the net offer. Retail investors have 35 per cent shares reserved from them.

Investors considering participation in Indegene’s IPO should view it through a medium to long-term lens, given its robust prospects for growth amidst increasing emphasis on quality and transparent communication in the life sciences sector, said ishnu Kant Upadhyay, Assistant Vice President - Research & Advisory at Master Capital Services

"While execution and service delivery remain critical factors, Indegene’s established relationships with top global pharmaceutical companies, digital-first approach, and global delivery model provide a strong foundation for sustained growth in the years ahead," he added.

Indegene reported a net profit of Rs 241.90 crore with a revenue of Rs 1,969.75 crore for the nine months ended on December 31, 2023. For the year ended on March 31, 2023, the company's net profit came in at Rs 266.10 crore with a revenue of Rs 2,364.10 crore.

Kotak Mahindra Capital Company, Citigroup Global Markets India, JP Morgan India and Nomura Financial Advisory and Securities (India) are the book running lead managers of the Indegene IPO, while Link Intime India is the registrar for the issue. of the company shall be listed at both BSE and NSE on May 13, Monday.