Tips to save IPO listing gains tax!
In the years 2023 and 2024, many IPOs brought huge earnings for the investors. But tax also has to be paid on this! What is the tax rule on booking listing gains from IPO? How can tax liability on listing gains be reduced? How will the tax be calculated on selling IPO shares?
Shares of Glenmark Life Sciences on Friday did a muted listing at Rs 751.10, a premium of 4.32% on the BSE. At 12:03 pm the stock extended gains and was trading at Rs 766, implying a premium of 6.39% over its issue price of Rs 720 per share. On an intraday basis, the counter made a high of Rs 799.95.
Listing strategy
Investors are a little disappointed with the muted listing done by Glenmark Life Sciences, after blockbuster listing that was witnessed in the month of July 2021. What should be the strategy now?
“The tepid listing provides a great opportunity for investors to those applicants who didn’t get the allotment. Also, the investors who got allotments can add more and hold the same from a longer-term perspective. The valuation at the listing price of Rs 750 comes out to be 26.01 times on the basis of P/E (price to earnings) multiple which is reasonable as compared to its peers namely Divis Lab and Laurus Lab which are trading at a P/E of 65.8 and 34.2 respectively,” said Saurabh Joshi of Marwadi Shares and Finance.
Even after a small run up on the stock price post listing, valuations are still in favour of investors which provides great upside potential. Considering the large opportunity size available in the API industry and the company’s leadership position in select high value non-commoditized API’s, investors should stay invested in the company, Joshi added.
Similarly, Yash Gupta of Angel Broking is of the opinion that short term investors can book profits, while long term investors can stay invested and those who didn’t get any allotment can buy at current levels as the company will perform better in the medium to long term.
About Glenmark Life Sciences
Glenmark Life Sciences is the leading manufacturer of Active Pharmaceutical Ingredients (APIs). The company develops, manufactures, and supplies high-quality APIs for cardiovascular disease (CVS), central nervous system disease (CNS), pain management, and diabetes, gastrointestinal disorders, anti-infectives, and other therapeutic areas.
Currently, it has 4 manufacturing facilities at Ankleshwar and Dahej in Gujarat and Mohol and Kurkumbh in Maharashtra State with an aggregate annual installed capacity of 725.8 KL as of December 31, 2020.
For the financial year ended March 31, 2021, the company reported total revenue of Rs 1,885.97 crore compared to Rs 886.87 crore in FY19. While the company reported a profit after tax of Rs 351.58 crore in FY21 versus Rs 195.59 crore posted in FY19.
(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)