Bain Capital-backed Emcure Pharmaceuticals IPO open till Friday: Should you subscribe?

On the second bidding day today, the IPO issue of Pune-based Emcure Pharmaceuticals continued to draw investors money and was overall subscribed 2.04 times. So, as the issue is open until tomorrow, here are the finer details about the offer to help you take your investment call in it.

Issue details

The long-awaited IPO will be open until July 5 and comprises fresh equity issuance worth Rs 800 crore together with an OFS of 1.14 crore shares by promoters and other shareholders. Shark Tank celebrity Namita Thapar will offload her stake in the OFS. At the upper end of the price band, the company looks to raise Rs 1,952 crore. 

The IPO is priced in the range of Rs 960-1008 per share, where investors can bid for 14 shares per lot.

Post the issue, the promoters’ shareholding in the company will be reduced to 78.24 per cent.

About the company

The company is one of the leading Indian pharmaceutical companies, engaged in developing, manufacturing, and globally marketing a broad range of pharmaceutical products across several major therapeutic areas. It is a research and development-driven company with a differentiated product portfolio that includes orals, injectables, and biotherapeutics. 

Issue objective

The proceeds from the fresh issuance will be put to repayment or prepayment of all or a portion of certain outstanding borrowings availed by the company and other general corporate purposes.

Financials

In the previous FY, the company’s net profit was reported at Rs 527.58 crore, while its revenue from operations was recorded at Rs 6,658.25 crore.Furthemore, the company’s margin stood at 19 per cent.

Analysts and brokerages take on the IPO

Hem Securities has recommended a ‘subscribe’ view on the IPO stating that it is offering the issue in the price band of Rs 960-1008 per share at P/E multiple of 36x on post issue FY24 PAT basis. Further, the subscribe is given considering the company’s strong R&D capabilities driving differentiated portfolio of products.

In its IPO note, HDFC Securities said the company is well-placed to everage position in the domestic market. It added that the company is focused on the domestic market, with its sales in India contributing to 48.2 per cent of its total revenue from operations for FY24.Also, it is a market leader in the gynaecology therapeutic area in the IPM, where it is ranked 1st and have a 13.53 per cent market share, in terms of domestic sales for MAT Financial Year 2024.

KR Choksey has also advised subscribing to the IPO as it believes the company’s strong presence in the Indian market with 70.7 per cent share of specialist Rx, as of Feb 24 vs. 58.7% for IPM and recent additions in MRs and manufacturing capacity should bode well for its profitable growth over medium term. The IPO at the upper price band of Rs 1,008 is being offered at a 10 per cent discount to its listed peers like Dr. Reddy’s, Cipla, Alkem Labs, Torrent Pharma, Mankind Pharma, Abbott India, and JB Chemicals on an LTM PE basis, it added.