The strong response for the initial public offering (IPO) of late ace investor Rakesh Jhunjhunwala's RARE Enterprises-backed Concord Biotech continued even on the third and final day on Tuesday as the overall issue was subscribed 23.15 times so far.

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The issue received strong demand from qualified institutional buyers as well as non-institutional investors. Investors have bid for 33.90 crore equity shares against Concord Biotech's IPO size of 1.46 crore shares.

The subscription for QIBs portion stood at 62.12 times, while for non-institutional investors it was 16.79 times. The demand from retail category stood at 3.60 times on Day 3.

Employees looked aggressive amongst investors, bidding 23.43 times the allotted quota. The company has reserved 10,000 equity shares for its employees in the IPO and they will get shares at a discount of Rs 70 per share to the final offer price.

GMP

According to market sources, the India-based biopharma company's shares are commanding a premium of Rs 124, and if the trends sustain, the stock is expected to fetch a decent premium of 17 percent on the listing.

The grey market premium (GMP), however, has declined 33 per cent for Concord Biotech in the past three days. The GMP stood at Rs 185 per share on August 4.

However, it is important to note that grey market premiums are just an indicator as to how the company's shares are stacked up in the unlisted market and are subject to change rapidly.

What brokerages say

Reliance Securities have advised investors to subscribe to the issue given the company's strong global footprint, diversified products portfolio, robust in-house R&D capabilities and experienced management team.

According to Swastika Investmart, the company has a diversified global customer base, strong R&D capabilities, and scaled manufacturing facilities. However, its international operations expose it to complex management, legal, tax, and economic risks.

"Additionally, the industry has been facing margin pressure in recent quarters. It is also worth noting that this IPO is purely an OFS, meaning that the company will not receive any proceeds from the offering. While the valuations may not appear overly attractive, this IPO could still deliver a moderate return, thus investors may apply for listing gain," the brokerage said.

The IPO is priced in the range of Rs 705-741 per share. The company is planning to mop up Rs 1,551 crore via maiden public issue of 2.09 crore shares that comprises only an offer for sale by Helix Investment Holdings, a part of Quadria Capital Fund LP. It means Helix will be exiting the company via this offer for sale. There is no fresh equity issue in the IPO.

Financials

Concord Biotech posted an 18 percent compound annual growth rate (CAGR) in revenue over FY21-23 with the EBITDA margin of 40 percent. The company's return ratios are healthy with RoE/RoCE of 20 percent and 19 percent and it generated free cash flow over the last two years with FCF/EBITDA at 29 percent.

The company is one of the leading global manufacturers of select fermentationbased APIs (F-APIs) across immunosuppressants and oncology with market share of over 20 percent by volume in 2022.

Kotak Mahindra Capital, Jefferies India, Citigroup are the book-running lead managers and Link Intime India is the registrar for the issue.

The shares of Concord Biotech will be listed on both BSE and NSE, with August 18 as the tentative date of listing.