| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 430 to ₹ 452 | 33 | 06th May, 2024 – 08th May, 2024 | ₹1,841.76 Cr |
Company Overview
Indegene is a provider of digital-led commercialization services for the life sciences industry, including biopharmaceutical, emerging biotech and medical devices companies and the sales and marketing of their products. Their solutions enable life sciences companies to develop products, launch them in the market, and drive sales through their life cycle in a more effective, efficient and modern manner. The company achieves this by combining over two decades of healthcare domain expertise and fit-for-purpose technology. Their portfolio of solutions covers all aspects of commercial, medical, regulatory, and R&D operations of life sciences companies. The company’s Enterprise Commercial Solutions and Omnichannel Activation Solutions cater to the commercial functions of life sciences companies, while their Enterprise Medical Solutions and Enterprise Clinical Solutions cater to their medical and R&D functions. Their Enterprise Clinical Solutions help drive efficiencies in the drug discovery and clinical trial operations of life sciences companies. They provide consultancy services through their subsidiary, DT Associates Ltd., under the DT Consulting brand. The company has established client relationships with each of the 20 largest biopharmaceutical companies in the world. Since its inception, Indegene has completed a total of 13 acquisitions and has enjoyed synergistic benefits from each of them. As of December 31, 2023, Indegene had 65 active clients whom they deliver solutions from their six operation hubs and 17 offices located across North America, Europe and Asia.
Objects of the issue:
The net proceeds from the fresh issue will be used towards the following purposes:
- Repayment/prepayment of indebtedness of one of material subsidiaries, ILSL Holdings, Inc
- Funding the capital expenditure requirements of company and one of material subsidiaries, Indegene, Inc
- General corporate purposes.
Investment Rationale:
Strong digital capabilities and in-house developed technology portfolio to propel growth
The company claims strong digital capabilities and an in-house developed technology portfolio that is set to drive its growth. At the core of their solutions are proprietary tools and platforms that have been developed in-house. These applications automate and create AI-based efficiencies using AI, ML, NLP, and advanced analytics capabilities, which are core components of their solutions. These proprietary “NEXT”-branded tools and platforms drive transformation across the commercialization lifecycle of biopharmaceutical products and medical devices. They aim to drive efficiency, effectiveness, and quality in various life sciences companies’ R&D and commercialization processes. The company has a dedicated team of 650 individuals supporting technology innovation. They have also built a Gen AI workbench that interfaces their technology team and life sciences subject matter experts (“SMEs”). Their technology team evaluates different Gen AI models and develops the technology infrastructure. Their SMEs can interact with this workbench using natural language and contextualize Gen AI for various business use cases. Their NEXT suite of tools and platforms helps them drive enterprise outcomes at scale in content management, safety and pharmacovigilance, regulatory intelligence and planning, customer data management and advanced analytics, clinical trials and workflow management. Thus, we believe that the company is poised to transform the life sciences industry and drive its growth.
Established long-standing client relationships to drive business performance
Indegene has built long-standing relationships with marquee biopharmaceutical companies, including each of the 20 largest biopharmaceutical companies globally by revenue for FY23. They typically enter into Master Service Agreements (MSAs) with clients ranging from 1 to 3 years, which broadly set out terms of their engagements, and they execute separate work orders for individual engagements setting out commercial terms. Due to the sticky nature of their solutions, recurring revenues account for a high proportion of their total revenues. Their retention rates were 122.83%, 159.89% and 129.90% for the financial years 2023, 2022 and 2021, respectively. The company’s operations are centred around their clients’ revenue-generating activities rather than managing cost centres, in contrast to several broad-based service providers. This allows them to develop strong and lasting relationships, ensuring revenue visibility for the company.
Valuation and Outlook:
Indegene has developed various tools and platforms, including applications that automate and create AI-based efficiencies in developing commercial assets, regulatory documents, and medical content. In addition, they have applications that assist in managing various processes of their clients’ workflow. The company provide domain expertise that helps them contextualize the use of technology to, among other things, optimize sales and marketing costs, drive omnichannel activation at scale, enable faster recruitment of patients for clinical trials and accelerate the time taken to make regulatory submissions. The company also continuously pursues acquisition opportunities that fall in capability buys, technology play, and efficiency play. Since its inception, Indegene has completed 13 acquisitions. The acquisitions have helped it access new technologies, markets and clients and have helped expand the range of solutions it offers to its clients. The company also has a record of sustained consolidated revenue from operation, growing at a CAGR of 54.5% during FY21-23. Going ahead, the improvement in operational performance is anticipated to be driven by strengthening their go-to-market approach through deepening relationships with existing clients, establishing new client relationships, strengthening new market segments, focusing on high-value opportunities, and scaling promising business verticals. The issue is valued at a P/E of 31.3x on the upper price band based on FY24E earnings, which we feel is fairly valued. We, therefore, recommend a SUBSCRIBE rating for the issue.
