Sudeep Pharma IPO Sees Strong Day 2 Bidding; Here's What Brokerages Say

Sudeep Pharma continued to see strong investor interest on the second day of its public bidding, with the issue being subscribed more than 2.5 times its offer size on Day 2 so far, according to NSE data at 11 am. The maiden issue of the Vadodara-based company received bids for nearly 2.6 crore shares, against an offer size of approximately 1.06 crore shares.

The NII category has been oversubscribed by more than five times, while retail bidders have taken up close to three times their allocated quota. On the other hand, QIB participation remains moderate for now, with about 10% of their reserved portion bid for.

The company’s unlisted shares are trading at a 19.39% premium to the IPO price in the grey market, as per Investorgain data. Despite easing slightly from the 20.40% premium seen on Day 1, the GMP still signals a healthy debut for the pharmaceutical firm.

The IPO received bids for 1,50,09,425 shares, as against 1,05,64,926 shares on offer, translating into 1.42 times subscription, as per NSE data. The category for non-institutional investors fetched 3 times the subscription, while the quota for Retail Individual Investors (RIIs) got subscribed 1.50 times. The portion for Qualified Institutional Buyers (QIBs) attracted 9% subscription.

Sudeep Pharma on Thursday said it has mobilised ₹ 268.5 crore from anchor investors. The ₹895 crore initial public offering (IPO) will conclude on November 25. The price band has been fixed at ₹563-593 per equity share. The IPO comprises a fresh issue of equity shares worth ₹95 crore and an offer-for-sale of nearly 1.35 crore equity shares, aggregating to ₹800 crore, by the promoters.

Proceeds from the fresh issue to the tune of ₹75.81 crore will be used for capital expenditure towards the procurement of machinery for its production line located at the Nandesari Facility 1, Gujarat, and for general corporate purposes.

Brokerages See Long-Term Potential

Investors are seeing the IPO for long-term investment opportunity, with SBI Securities giving 'subscribe' recommendation to the company. It noted that the company has recorded a CAGR of 8% in sales, 46% in EBITDA, and 49% in PAT over the last three years.

"At upper price band, the stock is trading at P/E multiple of 48.3x, based on post-issue capital. Given SPL’s leadership in the niche segment and future foray into high-growth businesses, we expect healthy profit growth aided by margin expansion. We recommend investors to SUBSCRIBE to the issue at the cut-off price," the brokerage firm said.

Swastika Investment stated that SPL operates as a preferred partner for critical pharma-grade ingredients, serving a solid roster of marquee global customers.

"The issue is considered "aggressively priced" at a P/E of 45–48x, fully capturing its current stable profitability. This steep valuation leaves very little room for immediate listing gains or short-term "pops," it said, while suggesting investors to apply only if they have a holding horizon of 2–5 years.

However, the company faces several risks, including revenue concentration, with over 35% coming from its top 10 customers and more than 60% linked to a single business segment, Swastika noted. It added that any quality lapses or audit issues could result in loss of orders and damage the company’s reputation.

The brokerage also highlighted that the firm’s heavy operational dependence on Gujarat exposes it to region-specific disruptions. Additionally, delays in new product launches could affect growth and profitability, while unsuccessful acquisitions may strain resources and weaken expected synergies.