Senores Pharmaceuticals IPO - Price Band, Allotment And Listing Date, Financials, Peer Comparison: DRChoksey

Deven Choksey Research Report

Senores Pharmaceuticals Ltd.'s will launch its initial public offering on December 20 and the offer closes for subscription on Dec. 24. The pharma company has fixed the price band in the range of Rs 372 to Rs 391 per share.

The Rs 582.11-crore IPO consists of a fresh issue of Rs 500 crore and an offer for sale of Rs 82.11 crore.

The allotment for Senores Pharma IPO is expected to be finalized on December 26, 2024.

The shares will be listed on the exchanges on Dec. 30.

Objects of the Offer

• Investment in subsidiaries.

• Funding working capital.

• General corporate.

Outlook and Valuation:

Senores Pharma has a presence in regulated markets, leveraging its US FDA-approved facilities and backward integration to maintain quality and cost efficiency.

The company’s focus on complex generics and specialty formulations positions it as a reliable player in high-margin segments, contributing to strong return ratios like ROE of 23.6%.

Additionally, the company’s expansion into critical care injectables and targeted acquisitions, such as Havix and RPPL, signal a growth-oriented strategy. However, the company’s small scale, with a revenue of Rs 2,145 million, limits its ability to compete with peers like Alembic and Ajanta Pharma. Despite decent profitability (PAT margin of 15.3%), Senores pharma underperforms on capital efficiency, with ROCE at 11.7%, far below leaders like Ajanta Pharma (32.2%).

The company’s overreliance on regulated markets, especially the US, and a few key customers increases vulnerability to market-specific risks. Operational challenges, including dependence on a single FDA facility and high working capital needs, add to concerns.

The company is valued at a steep P/E of 55.1x, the stock already factors in much of its growth potential, leaving limited upside. Considering current risks and high valuation we maintain a ‘Neutral’ rating to the IPO.

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