Sai Life Sciences Limited IPO: Check IPO Date, Lot Size, Price & Details

Introduction:

It is a prominent Contract Research, Development, and Manufacturing Organization (CRDMO). Established in 1999 and headquartered in Hyderabad, India, it specializes in providing end-to-end services for small molecule New Chemical Entities (NCEs) to global pharmaceutical and biotechnology companies.

It is recognized as one of the largest integrated Indian CRDMOs based on its revenue for the fiscal year 2024. It operates as a one-stop shop, offering a wide range of services, including discovery, development, and manufacturing. The company's integrated discovery capabilities encompass biology, chemistry, drug metabolism, and pharmacokinetics. It has a strong track record, having served over 200 small molecule discovery programs and over 160 customers in recent years.

IPO Details:

Objects of the Issue:

• Repayment/prepayment, in full or part, of all or certain outstanding borrowings availed by our company.
• General corporate purposes

Strengths:

• One of the largest integrated Indian CRDMOs: The company is one of the largest integrated Indian CRDMOs by revenue from operations for the FY-24.
• Strategic Global Footprint: It benefits from a strategically crafted global footprint, with operations located in key innovation hubs such as Boston, US, and Manchester, UK, complemented by large-scale manufacturing facilities in India.
• Expanding CMC (Chemistry, Manufacturing, and Controls) Capabilities and Portfolio: It has a significant and growing portfolio of commercial and late-phase products. This provides revenue stability and higher potential for return with earnings visibility.
• Commitment to Operational Excellence and Continuous Improvement: It emphasis on operational excellence through programs like "SaiGo" and "Sai Nxt" directly impacts its financial performance.

Risks:

• Customer Dependence: A significant portion of the company's revenue comes from a small number of customers, particularly in the biotechnology and pharmaceutical industries.
• Dependence on Incentives and Export Schemes: The company benefits from incentives and export promotion schemes provided by the Indian government. Changes or discontinuation of these schemes could negatively impact financial performance.
• Pricing Pressure and Cost Overruns: The company is subject to pricing pressure in this competitive market leading shrinkage in margins
• Extensive Government Regulation: Operates in a heavily regulated industry, requiring compliance with numerous local, state, national, and international laws and regulations.

Financial Highlights:

Conclusion:

India's CRDMO industry is poised for robust growth, projected to reach USD 14.1 billion by 2028. This growth is fueled by factors like:

• Cost-effective manufacturing base
• Skilled workforce
• Supportive government policies
• The "China Plus One" strategy adopted by global companies seeking to diversify their manufacturing locations.

Its peers like Divi’s, Suven and Syngene are operating with RoCE of 16%, 19.5%, and 13.9% respectively whereas Sai life Sciences operates with 10.3% and ROE of the above 3 stood at 11.8%, 14.6%, and 12% respectively while Sai Life sciences generate a ROE of 8.5%.

Comparing the efficiency ratios and margins of its peer’s earnings valuation of 120x seems to be on higher side.

Hence it advised to Avoid this IPO.