SBFC Finance vs Concord Biotech: Which IPO should you pick?

The Street is buzzing with IPOs with two of them, SBFC Finance and Concord Biotech, currently open for subscription. While both the issues have received thumbs-up from analysts, they clearly prefer SBFC Finance over the other if investors had to pick one.

SBFC Finance IPO, which closes on Monday, is reasonably priced, offering room to investors for healthy listing gains. The unlisted market trends validate the reasoning as the GMP for the company’s shares is around Rs 38, as against the upper price band of 57.

“The valuations of SBFC Finance are reasonable when compared to other listed peers, while concord Biotech offer comes with a concern of 100% offer for sale which may keep the offer away for conservative investors,” said Prashant Tapse, VP-Research, Mehta Equities.

The issue of SBFC Finance comprises fresh equity issue of Rs 600 crore and an offer for sale (OFS) of Rs 425 crore, while Concord Biotech is completely an OFS of 2.09 crore equity shares up, aggregating up to Rs 1,551 crore.

There is considerable buzz on the Concord Biotech offer, given the backing by Rakesh Jhunjhunwala’s Rare Enterprises and another leading investment firm Quadria Capital Fund. This IPO closes on August 8.

However, purely looking at valuations and thereby the probability of listing gains, analysts recommend investing in SBFC Finance.

At the upper price band, SBFC Finance stock is valued at 2.5-3x P/BV trailing FY23 book, which analysts believe is attractive. Meanwhile, Concord is valued in the range of P/E of 25-32x.”SBFC Finance has experienced management and the IPO is fairly priced. Market is also liking the fact that the current mood is in favour of financial companies. Concord Biotech is a very good company, but listing gains may not be good due to aggressive pricing,” said Avinash Gorakshakar of Profitmart Securities.

Concord Biotech is one of the leading global manufacturers of select fermentation-based APIs (F-APIs) across immunosuppressants and oncology with market share of over 20% by volume in 2022.

“After experiencing stellar listing gains in Utkarsh SFB, IdeaForge and Cyient DLM, investors are waiting for the next best IPO which would repeat the performance,” Tapse added.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)