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  • Writer's pictureJatin Agarwal

Concord Biotech IPO


Concord Biotech Logo

Company and IPO Overview:


Concord Biotech Limited is a biopharma company which is R&D-driven and based in India. The company is one of the world’s leading developers and manufacturers of fermentation-based APIs across immunosuppressants and oncology in terms of market share.


The Biotech company has established a global presence and supplies its products to over 70 countries including the USA, India, Europe, and Japan consisting of over 200 customers. As of FY23, the company has established two DSIR-approved R&D units with 148 members, which includes members having doctoral qualifications. Concord Biotech commanded a market share of over 20% by volume in 2021 across identified fermentation-based API products, including dactinomycin, sirolimus, tacrolimus, mycophenolate sodium and cyclosporine.


It has set up 3 manufacturing facilities in Gujarat comprising of API manufacturing facilities in Dholka and Limbasi and a formulation manufacturing facility in Valthera. These production facilities have been divided into 41 manufacturing blocks and 387 reactors at the Dholka and Limbasi sites, giving the company flexibility in plant layout to meet customer demands.


Concord manufactures fermentation and semi-synthetic-based products in therapeutic segments such as Immunosuppressants, Anti-bacterial, Oncology, Antifungals & others. This wide range of products has attracted customers across the globe. Concord also has a robust pipeline of products under development.


Furthermore to capitalize on the benefits of backward integration that its presence in APIs provides, the Biotech Company entered into the formulations segment in 2016. In India, it markets a portfolio of 27 brands across immunosuppressants, nephrologydrugs and anti-infective drugs for critical care.


After a series of super successful IPO’s Concord Biotech IPO is the next main board IPO which is ready to set its footprints in the stock market and the company is about to raise around ₹ 1551 crores via IPO comprising Offer For Sale only . The price band of the issue is ₹ 705 to ₹ 741 with a minimum market lot of 20 shares, The company is also allowing an employee discount of ₹70 per share. Concord Biotech IPO subscription for retail quota is 35.00%, NII is 15.00% and QIB is 50.00%.


Financials (rounded off):

Date

Total Revenue (₹ in cr)

​​​PAT (₹ in cr)

​31/03/2021

631

235

31/03/2022

736

175

31/03/2023

888

240


Objectives of the Issue:


1. To increase the visibility and brand image of the company through the issue.

2. To provide liquidity to the company’s selling shareholders.


IPO Details:

IPO Date

04/08/2023-08/08/2023

Face Value

₹1 per share

IPO Price Band

₹705-₹741 per share

IPO Lot Size

20 Shares

Listing at

NSE, BSE

Basis of Allotment

11/08/2023

Credit of Shares in Demat

17/08/2023

Listing Date

18/08/2023

Pre-Issue Shareholding

44.08%

Post-Issue Shareholding

44.08%

Retail Minimum Lot Size

20 shares (₹14,820)


Valuations & Margins:

Indicators

FY 21

FY 22

FY 23

EPS

22.45

16.72

22.95

P/E

-

-

32.29

EBITDA (%)

53.02

37.82

40.47

Debt/Equity

0.09

0.05

0.02

ROCE (%)

28.54

20.55

22.95


Important things to note about the Company:


Top reasons to consider the IPO:


1. Concord Biotech has established its presence across the fermentation value chain which requires specialized manufacturing expertise. This, combined with complicated technological capabilities, challenges in scaling up operations, and the huge capital investment in equipment and resources necessary, has resulted in a major entry barrier into the fermentation-based API industry.


2. In 2022, Concord Biotech became a major producer of fermentation-based APIs for immunosuppressants and oncology, with over 20% market share. They are expected to continue on the same trajectory with the growth potential in the immunosuppressant drug market.


3. The manufacturing facilities of Concord Biotech are in Dholka and Limbasi are divided into 41 manufacturing blocks to process different classes of APIs. This provides a flexible plant configuration and allows us to scale up production volume to meet increased demand.


4. Over the years Concord Biotech has established a long-standing relationship with certain key customers, including leading global generic pharmaceutical companies. As of FY22, the company has built a base of 200 customers in over 70 countries for both its API and formulation products.


Risk factors to watch out in the IPO:


1. As the manufacturing and research facilities of Concord Biotech are all located in Gujarat. Any factors affecting this geographical location can completely halt or slow down the operations.


2. A significant amount of the Concord Biotech’s revenue is based on a small number of consumers. Any major decrease in demand for its products from such clients may have a negative impact on the business.


3. As the Biotech Company derives a significant portion of its revenue from exports, it is subject to risks associated with exchange rate fluctuations depending on global economy.


4. The bargaining power of Concord Biotech is limited as the number of customers is few thus, it does not have much room to negotiate, and it would be difficult for the company to maintain profitability if there is any increase in operating costs.


5. Concord Biotech is entitled to incentive schemes like PLI which helps the company smoothly run its operations. The reduction or termination of such schemes or non-compliance with their conditions as per various acts could adversely affect its business.


Crisp Insights:

  • Concord Biotech IPO GMP Today: The Company is commanding a strong GMP of around Rs.145.

  • Concord Biotech IPO Review: Listing gains possible as per GMP data.


Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.



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