Sai Parenteral's IPO opens today: Should you subscribe or avoid this issue?

Sai Parenteral's is set to launch its initial public offering (IPO) for subscription on Tuesday, March 24. The pharmaceutical player is offering its shares in the range of Rs 372-392 apeice and investors can apply for minimum 38 equity shares and its multiples thereafter. The issue can be subscribed until Friday, March 27.

The Rs 440 crore-IPO of Sai Parenteral's includes a fresh share sale of Rs 285 crore and an offer-for-sale (OFS) of up to 31,57,880 shares worth Rs 124 crore. The net proceeds from the issue shall be utilized towards capacity expansion, funding F&D centre, repayment of debt, working capital requirements, investments in its wholly owned subsidiary and general corporate purposes.

Incorporated in 2001, Hyderabad-based Sai Parenteral's is a diversified pharmaceutical formulations company with expertise in research, development, and manufacturing. It operates in two segments: branded generic formulations and contract development and manufacturing organisation (CDMO) products and services for domestic and international markets.

Brokerage firms tracking the issue believe that the fundamentals and export expansion support long-term prospects, the IPO valuation appears expensive versus peers. However, they advise long-term investment only, warning that listing gains may be limited amid valuation and execution risks.

Sai Parenteral's operates in the branded generic formulations and CDMO businesses, with the product portfolio covering both high-value and high-volume categories across various therapeutic areas. SPL’s offerings span across dosage forms such as injectables, tablets, capsules, liquid orals and ointments, said SBI Securities.

The injectables dosage is a high margin segment for the company, and it plans to increase the share of injectables in the total revenue mix in the coming years. The issue is valued at FY25 (proforma) P/E and EV/Ebitda multiples of 88.2 times/46.3 times respectively based on post-issue capital, which appears to be at premium to its peers," it added with a 'subscribe for long-term' tag.

At a pre-IPO P/E of 72.19 times and ROCE of only 9.28 per cent, the valuation appears stretched. Peers like Innova Captab trade at 32.45 times and Gland Pharma at 44.71 times with significantly higher scale and earnings. The business fundamentals and growth trajectory are solid, but the P/E of 72 times is expensive for a company of this size and RoCE, said Swastika Investmart.

"It entered export markets in FY23 and supplies to Australia, New Zealand, Southeast Asia, the Middle East and Africa, with WHO-GMP and TGA-accredited facilities, which supports a long-term growth thesis. Investors seeking short-term/listing gains should avoid. Risk-reward is unfavorable. Better opportunities exist in the pharma sector at more reasonable valuations," it said.

Ahead of its IPO, Sai Parenteral's raised Rs 122.64 crore from five anchor investors as it allocated 31,28,485 equity shares for Rs 392 apiece. Its anchor book included names like Kotak Life Sciences Fund, Morgan Stanley Asia (Singapore), Kotak Mahindra Life Insurance, India Emerging Giants and Quant Mutual Fund.

The Noumed acquisition is the strategic pivot, a regulated-market beachhead in Australia/New Zealand backed by 451 TGA-approved dossiers and a government-grant-subsidised facility that would have taken years to build organicall, said Ashika Research.

"Management has demonstrated disciplined capital allocation across four acquisitions. We recommend 'subscribe' at the cut-off price for long-term investors with a 2–3 year horizon. Investors seeking near-term earnings visibility should await post-listing price discovery," it said.

Sai Parenteral's reported a net profit of Rs 7.76 crore, with a revenue of Rs 89.43 crore for the six months ended on September 30, 2025. It clocked a net profit of Rs 14.43 crore with a revenue of Rs 163.74 crore for the financial year 2024-25. At the current valuations, it commands a market capitalization of more than Rs 1,730 crore.

While the business benefits from structural tailwinds in the pharmaceutical sector and increasing outsourcing demand, it remains exposed to regulatory compliance risks, pricing pressure in generics, and execution challenges associated with scaling operations and capacity expansion, said Ventura Securities.

"The IPO comprises a fresh issue and an offer for sale, intended to fund capital expenditure for facility expansion, support working capital requirements, reduce debt levels, and provide partial liquidity to existing shareholders while improving visibility and access to capital markets," it added with a 'subscribe'

Sai Parenteral's has reserved 50 per cent of the net offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will have 15 per cent of allocation. Retail investors have 35 per cent of the reservation in the issue. Last heard, Sai Parenteral's was commanding no grey market premium (GMP) of Rs 7 apeice, suggesting a muted listing for the investors.

Arihant Capital Markets is the sole book running lead manager of Sai Parenteral's IPO and Bigshare Services is the registrar of the issue. Shares of the company shall be listed on both BSE and NSE on April 2, Thursday.