Gland Pharma IPO Fully Subscribed On Final Day Of Bidding; Sees Low Retail Response

The initial public offering (IPO) of Gland Pharma was fully subscribed early afternoon on Wednesday. At around 2 pm, data available on the exchanges showed that the Rs 6,480-crore issue received bids for 5.6 crore equity shares against IPO size of over 3.02 crore equity shares, which translates to 1.85 times subscription.

The issue has received good response from qualified institutional investors, the reserved portion of which has been subscribed 6 times so far, while the portion set aside for retail investors has witnessed 20 percent subscription and that of non-institutional investors is at 22 percent.

The Gland Pharma IPO has received a very low response, considering its size, strong business, the bright outlook for the pharma sector, general optimism in the market and heavy demand seen for other initial offerings this year.

In September alone, three issues were subscribed by as much as 150 times, compared to the 1.5 times demand seen for Gland Pharma's issue. Some media outlets say that the company's Chinese parent may be a factor that is hurting demand for the issue.

The Hyderabad-based company's largest stakeholder is China's Fosun Pharma which had acquired a 74 percent stake in the company in 2017.

After the IPO, Fosun's stake in the company will fall to 58 percent.

In fact, in its red herring prospectus (RHP) filed with SEBI, Gland Pharma also flagged evolving China-India political tensions as a risk factor to its IPO.

However, analysts say that while anti-Chinese sentiment due to border dispute may have affected the demand, the bigger reason could be the rich valuation of the shares being offered. At a price band of Rs 1,490-1,500 per share, a P/E multiple of approximately 30x, investors may not be able to make quick listing gains, unlike other IPOs this year.