Whalesbook
Sai Parenteral's initial public offering is seeing a notable split on its second day, with overall subscription reaching 41%. While anchor investors demonstrated strong confidence by investing ₹122.63 crore at the upper price band of ₹392 per share, including entities like Morgan Stanley Asia and Kotak Lifesciences Fund, retail investors remain hesitant.
This institutional backing contrasts with retail investor (RII) subscriptions, which stood at just 5% by the end of day two. Meanwhile, non-institutional investors (NIIs) fully subscribed their portion, and qualified institutional buyers (QIBs) booked 60%. The pattern suggests some professional investors accept the company's valuation, but it raises caution for the wider market.
Valuation Premium and Peer Benchmarks
Sai Parenteral is a pharmaceutical company focused on formulations and contract manufacturing. At the ₹392 IPO price, its market value after the offering is set to be around ₹1,732 crore. Based on annualized H1 FY26 earnings, this results in a price-to-earnings (P/E) ratio of approximately 111.53x. This is significantly higher than its larger listed peers, such as Gland Pharma and Innova Captab, which trade at much lower multiples. The average P/E for comparable companies in the sector is about 29.58x. While Sai Parenteral shows a competitive EBITDA margin of 24.18% and a favorable Return on Net Worth (RoNW) of 15.09%, the valuation seems ambitious given its smaller revenue scale compared to industry leaders.
The Bear Case: Execution Risks and Macro Headwinds
Caution around Sai Parenteral's IPO is driven by several factors. The company relies heavily on injectables and tablets, which made up over 90% of its revenue in FY23 (injectables) and over 36% in FY25 (tablets). Its revenue scale is also the smallest among its key competitors. The broader Indian IPO market this year has seen investor caution, with many recent mainboard IPOs delivering weak or negative listing gains. Global factors such as geopolitical tensions, rising oil prices, and inflation are adding to market volatility. This environment is prompting retail investors to prioritize solid fundamentals and governance over speculative listing gains. A lack of grey market premium (GMP) also suggests little immediate upside, pointing towards a potential flat debut.
Growth Projections and Sector Outlook
Sai Parenteral plans to use the ₹408.79 crore IPO proceeds—₹285 crore from a fresh issue and ₹123.79 crore from an offer-for-sale—for expanding capacity, research and development, and debt repayment. The Indian pharmaceutical sector is robust, with projections to reach $84.77 billion by 2030, growing at a 9.53% annual rate, driven by domestic healthcare needs and export demand. The company's move into regulated export markets and its CDMO capabilities align with these positive sector trends. Analyst views are mixed: some recommend subscribing for long-term growth, citing potential if expansion plans are executed well, while others advise caution and suggest waiting for price discovery after the stock lists.