NEW DELHI: Pharmaceutical giant Alkem Laboratories is all set to hit the primary market on December 8, as it looks forward to raising Rs 1,355 crore from the public. Broking houses across the board have come out with positive outlook for the issue. The price band of the issue has been fixed at Rs 1,020 to Rs 1,050 per equity share. The proceeds from the sale won’t accrue to the company, as it is an offer for sale with an issue size of 1.29 crore shares. The proceeds will be remitted to the shareholders. The pharma company is the fifth largest in the country and generates 75 per cent of its revenue from domestic sales in contrast with its peers whose revenues largely depend on the US generic market. Alkem is the leader in the largest therapeutic area with a market share of 11.2 per cent and is third in the gastro-intestinal and pain/analgesics therapeutic areas. Its product were prescribed by 210,885 customers in FY2015 and its distribution network includes 39 sales depots, 55 clearing and forwarding (C&F) agents, 15 consignees and eight central warehouses covering 6,576 stockists, brokerage Sharekhan said in a note to investors. The US market remains its primary focus, Sharekhan noted. The company sells its products in the US under the brand name of Ascend. “Ascend currently sells 17 products in the market, out of which 12 are own and five are in-licensed from third parties. Revenues from its international operations have grown at a CAGR of 45.7 per cent between financial years 2011 and 2015,” Sharekhan said. The contribution of international operations to its net revenues stood at 25.3 per cent as of 2015. Here are the views of different brokerages on the issue:- GEPL (View: Subscribe) The brokerage said the company has expanded substantially in the international market over the past couple of years largely through inorganic expansion. This has resulted in margin contraction from 18.6 per cent in FY12 to 12.8 per cent in FY15. On the valuation front, the brokerage says the company is available at 27.2 times its FY15 EPS at a higher price band of Rs 1,050. “We believe H1FY16 operational performance is going to sustain in the coming quarters and, thus, we recommend investors to ‘subscribe’ to the IPO with a longer-term horizon,” it said. Reliance Securities (View: Subscribe) The brokerage said Alkem has set forth an ambitious target of doubling its US contribution in the next five years. Today, the US contributes a quarter of the overall revenue. With its impending product pipeline and focused efforts in R&D. It said the company is following the footsteps of Alembic and Torrent pharma. “At a price band of Rs1,020-1,050, Alkem is valued at 15.7/16.2x FY18E EPS, (as per our back of the envelope calculations) which we feel is fairly valued given its operational scale. We recommend ‘Subscribe’ to the issue,” the brokerage said. Sharekhan (View: Attractive) “In the price band of Rs 1,020-1,050, the issue is priced at 26-27 times company’s price-to-earnings (PE) ratio for FY2015 which is at discount to its listed peers like Cadila, Lupin and Torrent,” Sharekhan said in a note. “On EV/EBITDA basis, it is offered at 24.8-25.5x EV/EBIDTA for FY2015 (15x on FY2016 annualised EBIDTA) which is in line with the listed comparable companies. The company has shown a significant improvement in its growth trajectory and margin profile in the first half of FY2016 which makes it appear relatively attractive if the company is able to maintain the growth momentum and sustain higher margins,” the brokerage said.