Saturday, November 20, 2010

Claris Lifesciences IPO - Analysis, Recommendation, Review

Claris Lifesciences, a sterile injectables pharmaceutical company, has come out with an IPO of Rs 300 crore.

Claris is one of the largest Indian sterile injectables pharmaceutical companies with a presence in 76 countries worldwide. Products offering comprises 113 products across multiple markets and therapeutic areas. All of its products are off-patent products, a significant majority of which are capable of being directly injected into the body and are predominantly used in the treatment of critical illnesses.

The IPO will open on November 24 and will close on November 26, 2010. The company has fixed the price band at Rs 278 - Rs 293 per share. Bids can be made for a minimum of 22 equity shares and in multiples of 22 equity shares thereafter. The company has decided to extend the IPO close date to 2nd December and lowered the price band to Rs 228 - Rs 235 per share because the IPO got only 30% subscribed.

Proceeds from the issue will be used for setting up of a new plant comprising a small volume parenterals line, a PVC bag line, a non-PVC bag line and a fat emulsion line; setting up of a new manufacturing line for propofol and other fat emulsion products at existing plant, Clarion IV; construction of a facility for research and development at Clarion manufacturing facilities; and prepayment of an identified term loan.

Anchor investors' portion of Claris Lifesciences' initial public offering (IPO) has received good response and got fully covered on Tuesday, one day before the issue opened for subscription. The company has received commitment of nearly Rs 54 crore through anchor investors' portion as against offering of 18,43,003 equity shares at Rs 293 a share - at higher end of price band of Rs 278-293. Anchor investors are Tree Line Asia Master Fund, Ashoka Flowering Tree Mauritius, Indea Capital and Long Term Opportunities Master Fund.

Enam Securities Private Limited, Edelweiss Capital Limited, JM Financial Consultants Private Limited and ICICI Securities Limited are the book running lead managers to the issue.

Recommendation:
MOIL IPO is also opening at the same time. We would recommend investors to invest in MOIL IPO if they have limited funds. If funds are not a limitation, investors can look at this IPO from a medium term view. However, if there are listing gains, encash them.

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