Aragen Life Sciences Limited IPO

01At a glance

What the company does: discovery chemistry and biology, pre-clinical research, and development and manufacturing of drug substances for pharmaceutical and biotech companies, for both small molecules and biologics (AP p.4).

Who pays it: 591 life-sciences customers in FY26, from large pharmaceutical companies to small biotech firms, mostly in North America (54.80% of revenue) and Europe (29.67%) (AP p.4).

Why it is raising money: ₹3,850 million to repay borrowings, ₹1,540 million for equipment in Hyderabad, ₹710 million for a biologics facility in Bengaluru, and the rest for general purposes (AP p.7).

How fast it has grown: revenue from ₹16,576 million in FY24 to ₹21,784 million in FY26, and profit from ₹1,601 million to ₹2,576 million (AP p.9).

The one thing to understand: this is mainly a research-services business that is growing its manufacturing side. Contract research was 64.51% of FY26 revenue, down from 67.15% in FY24, and customers are becoming more concentrated: the top ten rose from 31.36% of revenue to 43.29% in two years (AP p.11).

02The business, in plain words

Drug companies outsource parts of the work of inventing and making new medicines: making and testing candidate molecules, running animal studies, and producing the active ingredient for clinical trials and, later, sale. A contract research and manufacturing company does that work for a fee, by the scientist-hour for research, and by the kilogram or batch for manufacturing.

A drug developer abroad has a promising molecule → it hires Aragen to make variants and test them → if the drug advances, Aragen develops the manufacturing process and makes the batches for trials → it is paid per project, per scientist-month or per batch.

The company reports one segment and served 591 customers in FY26 (AP p.4). It employed 3,412 scientists at March 2026, 14.04% of them with PhDs (AP p.10).

Earnings equation: Revenue ≈ scientists × billing rate × utilisation, plus manufacturing volumes. Material margin, revenue less materials and consumables, was 72.91% of revenue in FY26 (AP p.10).

03Where the money comes from

Source: AP p.4, AP p.5.

Source: AP p.11.

European revenue rose from ₹4,103.95 million to ₹6,463.58 million in FY26 (AP p.4).

04The growth record

Source: AP p.9, AP p.10.

Revenue grew 11.31% in FY25 and 18.06% in FY26, and profit 12.66% and 42.83% (AP p.9, AP p.10).

Our arithmetic: revenue compounded about 14.6% a year from FY24 to FY26 and profit about 26.9% (AP p.9). Trade receivable days were 75 in FY24, 78 in FY25 and 87 in FY26 (DRHP p.52).

05What the growth is made of

The FY26 jump came with larger orders from a few customers. The top ten customers' share rose eight points in one year, and Europe grew 57% (AP p.4, AP p.11, our arithmetic). Material margin fell from 76.35% in FY24 to 72.91% in FY26, which fits a mix shifting towards manufacturing, where materials cost more (AP p.10). The number of scientists fell from 3,571 to 3,412 in FY26, while revenue rose (AP p.10).

06Earnings quality

Operating cash flow was ₹3,885.73 million, ₹3,357.09 million and ₹3,758.57 million over the three years, above reported profit each year (AP p.9). Net working capital rose from 64 days to 71 days, while inventory days fell from 64 to 52 (AP p.10). Adjusted EBITDA excludes share-based payments, IPO costs written off and some one-off charges, which the document lists (AP p.10).

07The balance sheet

Source: AP p.9, AP p.10.

Net worth rose by ₹7,634 million in FY25, more than that year's profit, and borrowings fell, which points to fresh equity in FY25 (AP p.9); the capital-structure chapter has the detail. Net debt was close to nil at March 2026 (AP p.10).

Our arithmetic: net debt of ₹208.19 million was 0.0 times the FY26 adjusted EBITDA of ₹5,937.65 million (AP p.9, AP p.10).

08What the money is for

Source: AP p.7.

The capital spending is scheduled across FY27 and FY28 (AP p.7). A pre-IPO placement of up to ₹1,600 million may reduce the fresh issue (AP p.7).

09Who is selling

Source: AP p.1, AP p.2. The investor row is our sum of four offers of 18,460,361, 3,323,006, 2,565,193 and 496,160 shares.

Reddy Investment Trust's average cost is ₹0.39 a share (AP p.1).

The four investor sellers are WSCPVIII (Singapore) Pte. Ltd., up to 18,460,361 shares; WSCPVIII EMP (Singapore) Pte. Ltd., up to 3,323,006; Goldman Sachs Capital Holdings III Pte. Ltd., up to 2,565,193; and WSCPVIII Parallel Intermediary (Singapore) Pte. Ltd., up to 496,160 (DRHP p.1).

10Promoters

The promoters are Davinder Singh Brar, chairman and non-executive director and a former chief executive of Ranbaxy Laboratories; Aparna Reddy Gunapati and Keshav Gunupati Venkat Reddy; the Reddy Investment Trust; and Madhubani Investments (AP p.6).

11Who already owns it

Source: AP p.8.

Promoters hold 58.35% before the offer (AP p.8, our arithmetic). Avendus Future Leaders Fund III and SBI Life Insurance hold 1.32% each (AP p.8).

12What changed just before the IPO

• Equity in FY25: net worth rose from ₹12,954 million to ₹20,588 million while borrowings fell (AP p.9).

• Customer concentration: the top ten customers rose to 43.29% of revenue in FY26 (AP p.11).

• Profit: up 42.83% in FY26 (AP p.10).

• Public company: converted from a private limited company in March 2023 (DRHP p.574).

• Last allotment before the IPO: a private placement of 12,576,151 shares at ₹503.93 a share in January 2025, to Leo Investment Holdings Pte. Ltd. and a Quadria Capital fund (DRHP p.111).

• Auditors: no change of statutory auditor in the three years before the filing (DRHP p.95).

• Receivables: trade receivable days rose from 75 in FY24 to 87 in FY26 (DRHP p.52).

13Capacity and expansion

The proceeds fund new equipment at the Hyderabad facilities and a biologics facility in Bengaluru run by Aragen Biologics, spread over FY27 and FY28 (AP p.7). Gross fixed-asset turnover was 0.91 in FY26, meaning revenue slightly below the gross value of fixed assets (AP p.10). Manufacturing sites are subject to inspections by regulators and customers (AP p.11).

14Market size and industry structure

The Frost & Sullivan report cited in the offer document describes drug companies shifting more research and manufacturing to integrated outside partners because of rising R&D costs and supply-chain risk, and forecasts growth in the global market for such services (AP p.6). Those forecasts are Frost & Sullivan's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• Integrated across the drug lifecycle: from discovery through commercial manufacturing, for small molecules and biologics (AP p.4).
• A broad customer base: 591 customers across the U.S., Europe, Japan, India and Asia-Pacific (AP p.4).
• Scientific depth: 3,412 scientists (AP p.10).

Against that: research revenue depends on innovators continuing to outsource, and a larger share of revenue now rests on a few customers (AP p.11).

16Peers the company named

Source: DRHP p.140.

The document gives an industry P/E range of 49.03 to 80.04, average 68.89 (DRHP p.140). For Aragen it gives FY26 earnings per share of ₹11.94 basic and ₹11.74 diluted, net asset value per share of ₹107.47 and return on net worth of 11.75% (AP p.9, DRHP p.140). No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Outsourcing demand. Revenue depends on drug companies outsourcing research; a pullback in biotech funding or pharma budgets would hit it (AP p.11).
• Foreign markets. North America and Europe are 84% of revenue, exposing it to their regulations, tariffs and currencies (AP p.11).
• Concentration. The top ten customers are 43.29% of revenue and rising (AP p.11).
• Quality and inspection. A failed audit or inspection could cost contracts (AP p.11).
• Scientific talent. The business depends on hiring and keeping scientists (AP p.10).

18Litigation and regulatory matters

Source: AP p.13.

Most of the quantified amount is tax disputes (AP p.13). No material matter is named among the top ten risks (AP p.11).

19Related-party transactions

The related-party summary was not read in detail for this study; the document sets it out in its summary chapter (DRHP p.90).

20What the offer document does not say

In the sections read for this study, the document does not give:

• Revenue from manufacturing versus research by year, beyond the research share.
• Names of the top customers, or how long the largest have been customers.
• What drove the FY25 increase in net worth.
• Utilisation of existing facilities.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. What drove the rise in top-ten concentration from 31% to 43%, and is it one large programme?
2. How much of FY26 revenue came from commercial manufacturing, and how long do those contracts run?
3. Why did the number of scientists fall in FY26 while revenue rose 18%?
4. What revenue does the Bengaluru biologics facility need to earn back its cost?
5. How exposed is revenue to U.S. biotech funding conditions?

2Sources and cited facts

This study was read from 2 documents the company filed. The 77 figures it cites are listed under the document each came from, with the page and the sentence as printed.