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ET Intelligence Group: Ahmedabad-based Harmony Biotech is a world provider of bio-pharmaceutical APIs and formulations, serving greater than 70 nations, together with regulated markets like the USA, Europe and Japan. The corporate’s IPO is a pure supply on the market with non-public fairness participant Helix Funding exiting its 20% stake and no cash coming into the corporate. The promoter holding stays unchanged at 44%.

Enterprise: Established in 1984, Harmony is likely one of the main international builders and producers of choose fermentation-based energetic pharmaceutical components (APIs) throughout immunosuppressants, oncology and anti-infective therapies. It instructions a market share of 20% in choose fermentation-based APIs. The corporate has an put in fermentation capability of 1250 cubic metres – helped by the corporate’s new facility in Limbasi, Gujarat, that expanded the capability by round 800 cubic metres. Late Rakesh Jhunjhunwala’s RARE Enterprises owns a 24% stake within the firm.

Financials: The corporate has a monitor file of robust and worthwhile monetary efficiency with wholesome money flows and dividend funds. Its revenues have grown at a CAGR of 17.6% over the previous three years from ₹617 crore in FY21 to ₹853 crore in FY23. The income have largely remained steady at ₹240 crore. The profitability in FY22 was impacted as a consequence of elevated prices from the Limbasi facility which is at the moment working at 32%. The return on capital employed stood at 24% on the finish of FY23.

Development Prospects: The worldwide small molecule fermentation API market is valued at $11 billion in 2022. The business has excessive entry boundaries as a consequence of excessive technical experience and operational necessities. In 2022, greater than 90% of the permitted and generally prescribed small-molecule organ transplant medicine had been fermentation-based. Harmony has one of many widest ranges of small-molecule fermentation-based immunosuppressant APIs used for organ transplants. The dimensions-up of the Limbasi facility will kind an vital driver for progress for the corporate.

Valuations & Danger Elements: The IPO values the corporate at a PE a number of of 32.3 based mostly on the FY23 financials. These are honest valuations for the fast-growing and extremely worthwhile firm. Nonetheless, in comparison with its bigger friends within the API business resembling Divi’s Labs, Suven Pharma or biotech participant Biocon on scale and dimension, the corporate’s valuations appear to have factored within the promising elements of the enterprise.