BF Biosciences Limited: IPO Offering 25mn shares at Rs55/share floor price

Staff Report:
The Pakistan Stock Exchange (PSX) is set to witness another IPO in 2024, with the book building scheduled for September 25-26, 2024. BF Biosciences is offering 25 million shares with a floor price of Rs55/share (Rs1.375bn/US$4.9mn) and a cap of Rs77/share (Rs1.925bn/US$6.9mn). The market capitalization of the company post-IPO would be Rs4.9bn-6.8bn (US$18-25mn).

The proceeds from the IPO will be used to:

Purchase raw and packing materials to meet post-expansion working capital needs.
Purchase plant and machinery to broaden the product base and improve process efficiencies.
Acquire export certifications (e.g., PIC/S, SRA) and support new product development, including Glucagon-like Peptide (GLP1).

Any funds raised above the floor price will further support additional working capital needs arising from the expansion and the cartridge suspension system.

BF Biosciences has already incurred a total CAPEX of Rs4bn on the expansion of Line II, with Rs1.075bn funded through internally generated cash and Rs2.925bn through debt financing. Of the Rs2.925bn debt, Rs2.090bn is under the Temporary Economic Refinance Facility (TERF), with a fixed markup rate of up to 2.40%, while the remaining is from Karandaaz, carrying a fixed markup of 3%.

30% of BF Biosciences’ product portfolio is categorized as non-essential, while the remaining 70% is categorized as essential, according to management. With a floor price of Rs55 per share, BF Biosciences’ price-to-earnings (P/E) ratio is 9.4x (pre-IPO) and 13.1x (post-IPO), based on the last twelve months’ profits (April 2023 to March 2024), compared to the sector’s average P/E ratio of 26.5x and a median P/E of 18.3x.