Indegene IPO: 5 Things to Know

India's IPO market roars on! After a record-breaking March with 27 company debuts, the party shows no signs of stopping.

This red-hot streak is fuelled by strong investor demand, prompting a fresh wave of companies to raise capital on Dalal Street.

Next week promises continued action with three IPOs scheduled to hit the exchange. Two hail from the dynamic SME space, while the remaining one enjoys the prestige of the mainboard.

These offerings are collectively expected to rake in a significant Rs 18.8 billion (bn).

Leading the charge is likely to be Indegene, with an anticipated haul of Rs 18.4 billion.

About Indegene

Indegene provides services for the life sciences industry. They assist with drug development, clinical trials, regulatory submissions, pharmacovigilance, complaints management, and sales/marketing support.

The company's services can be divided into four segments namely, enterprise commercial solutions, omnichannel activation, enterprise medical solutions, and enterprise clinical solutions and consultancy services.

The subsidiary of the company, DT Associates, provides consulting services under the DT Consulting brand. It helps life sciences companies manage their digital transformation efforts to ensure continued success in customer experience.

The company had 65 clients actively engaged with its services.

#2 Object of Issue

The company proposes to utilise the Net Proceeds towards funding the following objects:

• Repayment/prepayment of indebtedness of one of the Material Subsidiaries, ILSL Holdings, Inc.;
• Funding the capital expenditure requirements of the company and one of the Material Subsidiaries, Indegene, Inc.
• General corporate purposes and inorganic growth.

#3 A Look at the Financials

The company has demonstrated robust financial performance, with revenue from operations witnessing a compound annual growth rate (CAGR) of 33.6% between the financial years 2021 and 2023.

The company was able to grow its volumes on the back of its long-term relationship with customers.

Similarly, its net profit surged significantly, from Rs 3.2 bn to Rs 10.6 bn in FY23, at a CAGR of 49%.

Its reserve and surplus jumped to Rs 10.2 bn during the past three years.

Indegene Financial Snapshot (2021-23)

Particulars	31-Mar-21	31-Mar-22	31-Mar-23
Revenues (Rs in bn)	9.9	16.9	23.6
Revenue Growth (%)	-	70.7	39.6
Net Profit (Rs in bn)	1.5	1.6	2.7
Net Worth (Rs in bn)	3.2	7.6	10.6

Data Source: Company's Red Herring Prospectus (RHP)

Indegene's revenue for the nine-month period ended December 2023 was Rs 19.7 bn, while net profit was Rs 2.4 bn.

#4 Arguments in Favour of the Business

• Indegene possesses advanced digital capabilities, leveraging cutting-edge technologies to provide innovative solutions across various segments of the healthcare industry. This includes digital platforms for drug development, clinical trials management, regulatory compliance, pharmacovigilance, and marketing support.
• The company has a rich portfolio of internally developed technologies tailored to the specific needs of the life sciences industry. These technologies streamline processes, enhance efficiency, and improve decision-making for clients throughout the drug development lifecycle.
• Indegene boasts long-standing relationships with major players in the life sciences industry. These relationships are built on trust, reliability, and the delivery of high-quality services, fostering loyalty and repeat business.
• With a global footprint and delivery centers strategically located around the world, Indegene offers comprehensive support to clients on a global scale. This enables seamless collaboration, efficient project execution, and timely delivery of services across different regions.
• Indegene has a proven track record of creating value through strategic acquisitions. By integrating complementary businesses and technologies, the company enhances its service offerings, expands its market reach, and drives growth and innovation within the life sciences sector.

#5 Risk Factors

• Indegene's business is solely focused on the life sciences industry, making it vulnerable to factors impacting this sector's growth and trends. Any slowdown or adverse developments within the life sciences industry could potentially affect Indegene's revenue and profitability.
• A significant portion of Indegene's business comes from a few large clients primarily located in North America and Europe. The company's success is heavily reliant on maintaining strong relationships with these key clients. Any disruptions or loss of these clients could have a detrimental impact on Indegene's business and financial performance.
• The majority of Indegene's revenues are derived from its subsidiaries. Any disruptions in the operations of these subsidiaries, such as operational issues or regulatory challenges, could adversely affect Indegene's overall business, financial condition, and results of operations.
• Indegene plans to invest a significant portion of its net proceeds into its subsidiaries through debt. However, the company may have limited control over how these funds are utilized due to legal restrictions in the countries where its subsidiaries are incorporated. This lack of control raises the risk of inefficient use of funds or misalignment with Indegene's strategic objectives.

Conclusion

The life sciences sector has played a pivotal role in enhancing global access to affordable medicines and has increasingly become a hub for clinical trials and research and development activities.

With the Indian economy surpassing US$ 100 bn in 2022 and projected to reach US$ 150 bn by 2025, India's significant contribution to the global biotechnology industry is evident, aiming for a 3-5% market share.

Ambitious growth targets, including a goal of reaching US$ 300 bn by 2030, underscore the sector's potential, particularly in sub-sectors like pharmaceuticals, biotechnology, and medical devices.

The sector's growth is further fueled by factors such as the expanding and ageing population, which serve as primary drivers. This trajectory bodes well for companies like Indegene.

Nevertheless, it is always prudent to conduct thorough research before making any investment decisions.

Ensure that the investment aligns with your financial objectives and matches your risk tolerance level.

For more information on IPOs, check out the list of upcoming IPOs.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...