Anthem Biosciences IPO heats up grey market with rising GMP; worth a closer look?

About the Issue:  

Anthem Biosciences Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. See the issue details below.

Objects of the Issue  

Considering that the issue is exclusively an offer for sale, it is crucial to note that the company will not receive any offer proceeds. Instead, all offer proceeds will flow to the selling shareholders, distributed in accordance with the number of offered shares they sell as part of the offer. 

Promoter holding 

Ajay Bhardwaj, Ganesh Sambasivam, K Ravindra Chandrappa and Ishaan Bhardwaj are the promoters of the company. The promoters and promoter group currently hold a pre-issue shareholding stake of 76.87 per cent in the company.

Company Profile  

The company is an innovation-led, technology-focused Contract Research, Development and Manufacturing Organization (CRDMO) with fully integrated capabilities across drug discovery, development, and manufacturing.

Its CRDMO segment primarily serves customers in regulated markets, while the specialty ingredients division complements it by targeting both regulated (such as the United States and Europe) and semi-regulated markets (including India, South and Southeast Asia, Latin America, and the Middle East). As of March 31, 2025, the company served over 550 customers across more than 44 countries.

The company specializes in fermentation-based APIs, including probiotics, enzymes, peptides, nutritional actives, vitamin analogues, and biosimilars. With a fermentation capacity of 142 kL as of March 31, 2025—the highest among Indian CRDMO firms—it is poised to expand to 182 kL by the first half of FY26. This expanded capacity is expected to be more than six times that of the second-largest player in the industry, as per the F&S Report.

Financials 

The company has consistently demonstrated robust topline growth, registering a 30 per cent CAGR in revenue between FY23 and FY25. While net profit saw a marginal dip in FY24 due to a notable rise in finance costs, it rebounded with a 23 per cent year-on-year surge in FY25.

The bottom line is expected to improve further, as the company significantly reduced its total borrowings from Rs 233 crore in FY24 to Rs 109 crore in FY25, likely easing the finance cost burden. Notably, the company maintained healthy net profit margins of 34 per cent, 25 per cent, and 23 per cent over the past three financial years.

Valuation & Returns 

The issue is priced with a P/BV ratio of 13.22 times, calculated using its Net Asset Value (NAV) of Rs 43.10 as of March 31, 2025. Considering the company's FY25 earnings and fully diluted equity capital, the price-to-earnings (P/E) ratio is calculated at around 70x.

In FY25, the company reported a strong financial performance, achieving a return on equity (RoE) of 21 per cent and a return on capital employed (RoCE) of 27 per cent, the highest among its listed peers.

Considering both valuation and returns, the company stands out against its listed peers, with the issue offering an attractive valuation-to-return proposition.

Outlook

The global and domestic pharmaceutical industries are set for robust growth, driven by factors such as increasing healthcare expenditure, rising demand for complex generics and biologics, notable geriatric population, and heightened focus on R&D and outsourcing. In this evolving landscape, CROs and CDMOs play an increasingly vital role.

However, the company faces certain risks, including a high concentration of manufacturing revenue—developmental and commercial manufacturing contributed around 70 per cent of revenue from operations in FY25—and significant reliance on North American and European markets. Its top five customers accounted for 70 per cent of the company’s revenue in FY25.

On the strength side, the company offers end-to-end services across the drug development lifecycle, has a diversified global presence, long-standing relationships with reputed global clients, and a fermentation capacity expected to grow to six times that of the second-largest player in the industry. These, coupled with consistent financial performance, underscore its competitive position.

Given the industry outlook and the company’s strong fundamentals, we recommend subscribing to the issue from a long-term investment perspective.