Anthem Biosciences IPO review (Apply)

•    The company is one of the leading global players in innovation driven, technology focused CRDMO segment.
•    It enjoys niche place in the segment and leads the pack of players.
•    The company marked steady growth in its top lines for the reported periods.
•    Higher net for FY23 is attributed to exceptional income adjustment for the said year.
•    Though prima-facie the issue appears aggressively priced, investors may park funds for long term.

ABOUT COMPANY:
Anthem Biosciences Ltd. (ABL) is an innovation-driven and technology-focused Contract Research, Development and Manufacturing Organization (“CRDMO”) with fully integrated operations spanning across drug discovery, development and manufacturing. It is one of the few companies in India with integrated New Chemical Entity (“NCE”) and New Biological Entity (“NBE”) capabilities across drug discovery, development, and commercial manufacturing, according to the F&S Report. As a one-stop service provider, it serves a range of customers, encompassing innovator-focused emerging biotech and large pharmaceutical companies globally. ABL is one of the youngest Indian CRDMO companies and the fastest Indian CRDMO among the assessed peers to achieve a milestone of Rs. 1000 cr. of revenue within 14 years of operations, reaching this milestone in Fiscal 2021, according to the F&S Report. The company also recorded the highest revenue growth in Fiscal 2024 to Fiscal 2025 as compared to its assessed peers in India and globally, according to the F&S Report. Innovation forms the cornerstone of organization, and it has undertaken several initiatives to differentiate itself across modalities and manufacturing capabilities aimed at meeting customers’ evolving requirements while maintaining a commitment to sustainability and efficiency.

ABL’s business comprises CRDMO services and the manufacture and sale of specialty ingredients. Its CRDMO business caters to customers in regulated markets, while specialty ingredients business complements its CRDMO business by targeting both regulated markets (such as United States and Europe) as well as semi-regulated markets (such as India, South and Southeast Asia, Latin America and Middle East). Its specialty ingredients business enables it to draw on technological capabilities across biology and chemistry and leverage its fermentation capacity to manufacture and commercialize specialty ingredients as an additional revenue stream. Since inception in 2007, it has completed over 8,000 Projects and worked on molecules with more than 675 customers at various stages of the drug development lifecycle under CRDMO business. Over the last three Fiscals it has served a diverse, global customer base of 287 customers across more than 3,000 Projects.

Over the last 15 years, ABL has completed over 8,000 unique programs commissioned by its customers (“Projects”) and worked on molecules with more than 675 customers at various stages of the drug development lifecycle under CRDMO business. For Fiscal 2025, it manufactured API and advance intermediates for 10 commercialized molecules, all of which it has supported since discovery. 5 of the top 6 commercialized molecules in revenue terms for Fiscal 2025 it manufactured are for 3 large pharmaceutical companies (including after acquisitions or consolidations). These 5 commercialized molecules the company manufactures for the 3 large pharmaceutical companies (including after acquisitions or consolidations), had a collective end market sales value of US$ 11.3 billion in 2024 and are expected to grow at a CAGR of 13.5% to US$ 21.4 billion in value with a 1.5% market share by 2029, according to the F&S Report. Its existing Projects as of March 31, 2025 involve complex molecules across various modalities and stages of development, including 7 in the ADC space, 2 RNAi, 10 lipids, 10 peptides and 1 oligonucleotide. It has a diverse mix of 242 Projects, with 68 discovery Projects (relating to 355 discovery molecules synthesized), 145 Early Phase Projects, 16 Late Phase Projects (relating to 10 Late Phase molecules) and 13 commercial manufacturing Projects (relating to API and advance intermediates for 10 commercialized molecules) for Fiscal 2025.

According to the F&S Report, it is 1 of 3 CRDMOs in India who possess technological capabilities across ADCs, RNAi, peptides and oligonucleotides which are among the fastest growing technologies in the pharmaceutical industry. As of March 31, 2025, it had 2062 employees on its payroll (including 1015 Scientific Staff and 35 PhDs). 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route secondary IPO worth Rs. 3395.00 cr. (approx. 59561404 equity shares at the upper cap). The company has announced a price band of Rs. 540.00 – Rs. 570.00 per equity shares of Rs. 2 each. The issue opens for subscription on July 14, 2025, and will close on July 16, 2025. The minimum application to be made is for 26 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 10.65% of the post-IPO paid-up equity capital. This being an Offer for Sale (OFS), no funds going to the company. The issue is being made to offer exit to some of its stakeholders and listing benefits.

The company has reserved equity shares worth Rs. 8.25 cr. (approx. 144737 equity share at the upper cap) for its eligible employees and offering them a discount of Rs. 50 per share. From the rest, it has allocated not more than 50% for QIBs, not less than 15% for HNIs and not less than 35% for Retail investors.

The joint Book Running Lead Managers (BRLMs) to this issue are JM Financial Ltd., Citigroup Global Markets India Pvt. Ltd., J.P. Morgan India Pvt. Ltd., and Nimura Financial Advisory and Securities (India) Pvt. Ltd., while KFin Technologies Ltd., is the registrar to the issue. JM Financial Services Ltd., is a syndicate member.

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs. 13.60 – Rs. 1697.104 per share (based on Rs. 2 FV) between May 2008, and June 2025. It also issued bonus shares in the ratio of 12 for 1 in November 2022. The average cost of acquisition of shares by the promoters/selling stakeholder is Rs. NIL, Rs. 0.30, Rs. 0.42, Rs. 0.94, Rs. 0.97, Rs. 6.61, and Rs. 139.12 per share. 

Post-IPO, its current paid-up equity capital of Rs. 112.32 cr.  as it is a pure secondary issue. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 32011.77 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated restated basis) posted a total income/net profit, of Rs. 1133.99 cr. / Rs. 385.19 cr. (FY23), Rs. 1483.07 cr. / Rs. 367.31 cr. (FY24), and Rs. 1930.29 cr. / Rs. 451.26 cr. (FY25). The company marked steady growth in its top lines, but its bottom lines for FY24 marked decline at net level on account of exceptional items adjusted during FY23.

The company enjoys good margins following its unique position and speedy solutions to its global customers and the management is confident of maintaining the trends going forward.

For the last three fiscals, the company has (on a consolidated basis) posted an average EPS of Rs. 7.32 (Basic), and an average negative RoNW of 21.24 %. The issue is priced at a P/BV of 13.23 based on its NAV of Rs. 43.10 as of March 31, 2025, as well as on post-IPO NAV basis.

If we attribute FY25 earnings on its current and post-IPO paid-up equity then the asking price is at a P/E of 70.90, and based on FY24 earnings, it stands at 87.16. Thus, based on its recent financial performance, the issue appears aggressively priced.

The company has reported PAT margins of 33.97% (FY23), 24.77% (FY24), and 23.38% (FY25), and RoCE margins of 31.69%, 25.71%, and 26.88% respectively, for the referred periods.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has already adopted a dividend policy in December 2024, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Syngen Intl, Sai Life Sciences, Cohance Lifesciences, and Divi’s Lab, as their peer. They are trading at a P/E of 54.1, 94.5, 145, and 82.7 (as of July 10, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
The four BRLMs associated with the issue have handled 63 public issues in the past three fiscals, out of which 14issues closed below for issue price on the listing date.