Sai Parenterals
IPO Size: Rs. 409 cr
- Fresh Issue of Rs. 285 cr for (i) capex Rs. 111 cr (ii) repayment Rs. 50 cr of Rs. 186 cr debt, as of 31.12.25 (iii) working capital Rs. 33 cr (iv) R&D center Rs. 18 cr
- Offer for Sale (OFS) of Rs.124 cr, by 30 financial investors, completely exiting 8.6% combined stake
Price band: Rs. 372-392 per share
M cap: Rs. 1,732 cr, implying 24% dilution
IPO Date: Tue 24th Mon to Fri 27th Mar 2026, Listing Thu 2nd Apr 2026
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Telangana-based Pharma Manufacturer
Sai Parenteral’s Limited manufactures branded generic formulations and contract development and manufacturing organisation (CDMO) for domestic and international markets. Rs. 160 cr annual revenue is split 80:20 between the two verticals respectively, with CDMO being faster growing. Company has 5 manufacturing plants in India, with exports accounting for 20% of revenue, mainly to Australia and Philippines.
Unconvincing Objects of Issue
An object of fresh issue is part-funding acquisition of a loss making Australian business Noumed, in which, 75% stake was acquired for Rs. 132 cr last year. An additional Rs. 200 cr capex is planned to be spent on a greenfield manufacturing facility. Noumed was loss making in 9MCY26 with CY24 net margin of just 2% on Rs.354 cr topline. Thus, Noumed’s margin is lower on a bigger topline, vis-à-vis Sai. Thus, rationale for this sizeable acquisition in a foreign geography is not convincing!
As far as the capex of Rs. 111 cr, capacity utilization of present manufacturing facilities is 60%. Hence, 40% capacity addition by Jan 2027 also looks premature.
Small Scale of Operations
On FY25 revenue of Rs. 163 cr, Sai Parenteral’s clocked 19-20% EBITDA margin and ~9% net margin. Despite low turnover, top 10 customers account for 66% of formulations revenue i.e. 50% of company revenue, increasing business risk
H1FY26 revenue stood at Rs. 87 cr with Rs. 8 cr PAT, leading to an EPS of Rs. 2.2
Company’s working capital management is extremely poor, with debtors representing over 9 months of sales, which is quite unusual, especially for domestic business.
Exorbitant Pricing
Even if optimistic case of 30% growth is assumed for FY26E and FY27E, m cap of Rs. 1,732 cr leads to one year forward PE multiple of 70x, which is irrational for small topline, low single digit RoE and dismal working capital management.
In June 2025, company undertook private placement at Rs. 128 per share and at Rs. 195 per share in Sep 2025. After 9 months and 6 months, there is no justification for a 3x and 2x price. The IPO appears to be simply chasing March 2026 deadline without any consideration to secondary market conditions.
