Senores Pharmaceuticals Limited IPO: Check IPO Date, Lot Size, Price & Details

Business Overview:

It is a global research-driven pharmaceutical company engaged in developing and manufacturing generic pharmaceutical products. The company focuses on the Regulated Markets of the US, Canada, and the UK, and has a presence in 43 emerging markets.

It identifies, develops, and manufactures a diverse range of specialty and complex pharmaceutical products.

A key differentiator for the company is its US FDA-approved manufacturing facility in the US - Atlanta, and long-term marketing arrangements with pharmaceutical companies.

Senores also has a CDMO business and manufactures critical care injectables and APIs.

It has 3 manufacturing facilities, 2 in India and 1 in the US. The company also has 3 dedicated R&D facilities located in India and the US.

IPO Details:

 Objects of the Issue:

• Investing in the subsidiary, Havix, to fund the capex for setting up a manufacturing facility for sterile injections at the Atlanta facility.
• Investing in Havix to repay some of its borrowings
• Repaying certain borrowings of the company.
• Funding working capital requirements of the company.
• Investing in Senores Pharmaceuticals Inc. (SPI) and Ratnatris Pharmaceuticals Private Limited (Ratnatris) to fund their working capital needs
• Funding inorganic growth through acquisitions, strategic initiatives, and for general corporate purposes

Strengths:

• Presence in Regulated Markets: It excels in regulated markets like the US, Canada, and the UK, leveraging its US FDA-approved facility to efficiently serve these high-value regions.
• Presence in Emerging Markets: The company has established a presence in 43 countries in the emerging markets, with a portfolio of 205 products. The company also has product registrations for 205 products and has filed for 406 product registrations in these markets.
• R&D Investment: With 33.25% of FY24 revenue dedicated to R&D, Senores has built a robust portfolio of complex and niche products through consistent innovation.
• Competitive Generic Therapy (CGT) Designations: The company has secured CGT designations for some of its products, granting them a six-month exclusivity period in the US market.

Risks:

• Customer Concentration: For the six months ended Sep-24, the largest customer contributed 56%, and top 5 customers accounted for 56.84% of revenues.
• Dependence on Third-Party Partners: The company's business is heavily reliant on third-party marketing partners and distributors
• Risk of Supplier Discontinuation: It sources its raw materials through purchase orders, negotiating prices per order, without long-term supplier contracts.
• Regulatory Risks: The pharmaceutical market is subject to strict regulations. Failure to comply with these regulations could result in litigation and liabilities

Financial Highlights:

Conclusion:

The pharma sector is well placed for growing leaps and bounds due to several factors, such as patent cliff, Bio Secure Act in US.

The RoE and ROCE stood at 23.6% and 11.7% respectively, which in similar lines with its peers. Also    EBITDA & PAT Margins are decent in comparison with its peers.

Comparing the efficiency ratios and margins, and growth potential - earnings valuation of 28x seems to be fair.

Therefore, we recommend to subscribe to this IPO for listing gains.