The initial public offering (IPO) of Emcure Pharma opened on 03 July to raise Rs 1,952 crore from through its combination of fresh issue and offer for sale (OFS) component.
The Rs 1,952 IPO consisted of fresh issues of up to Rs 800 crore and an offer-for-sale (OFS) worth Rs 1,152 crore by promoter and investor selling shareholders.
The price band for the issue is fixed at Rs 960 to 1,008. The retail investors can bid for maximum of 13 lots, one lot consists of 14 shares with minimum investment required at Rs 14,112.
Emcure Pharma IPO which opened on 03 is scheduled to close on 05 July. The allotment will be declared on 08 July and subsequently the shares will be listed on 10 July on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
Kotak Mahindra Capital, Axis Capital, JP Morgan India and Jefferies India are the book running lead managers, while Link Intime India is the registrar to the offer.
Exits And Returns
Currently the share holding pattern suggested that Satish Mehta and Sunil Mehta along with other innvestors hold 98.90 per cent of the company.
In the OFS, Namita Thapar also intends to off-load her part of holding. Currently Thapar holds 63,39,800 shares or 3.5 per cent stake in the firm, out of which she will off-load 12,68,600 shares.
Notably, Thapar will make 293 times returns on the upper price band of Rs 1,008. Her weighted cost of acquisition of the Emcure shares is around Rs 3.44 with a total investment of Rs 2.18 crore.
With a 41.85 per cent stake in the company, Satish Ramanlal Mehta will also participate in the OFS by giving up to 4,20,000 equity shares. He currently owns 75,816,748 equity shares. Mehta will profit 52 times on the upper band of Rs 1,008.
Analyst Advice
“Emcure's financial performance is driven by leveraging its leadership position in key therapeutic areas, established presence in international markets, proven track record in building brands, higher entry barriers, focus on R&D and strong manufacturing capabilities. The issue is valued at a price to earnings (PE) of 36.6 times on the upper price band based on FY24 earnings, which is deemed fair. Therefore, we recommend a ‘Subscribe’ rating for the issue,” said Prathamesh Masdekar, Research Analyst, StoxBox.
“For the given periods, Emcure reported persistent top-line growth. However, its bottom line posted declining trends due to higher provisions for interest and depreciation. Reduction in debt post-IPO will improve its bottom line commensurately. The issue appears reasonably priced based on FY24 annualized earnings. We expect a decent listing at around Rs 1,300 to 1,350 per share, resulting in a listing premium of around 30 per cent,” said Amit Goel, Co-Founder & Chief Global Strategist, Pace 360.
IPO Objectives
The proceeds of Rs 800 crore from the fresh issue will be utilised for prepayment or scheduled repayment of a portion of certain outstanding borrowings availed by the company and general corporate purposes.
Additionally, the firm will also get benefits on listing in the public market which will enhance the brand’s visibility and provide liquidity to the shareholders.
Firm’s Financials
The firm registered revenue of Rs 6,715 crore in FY24, compared to Rs 6,031 crore in FY23.
The firm’s profit after tax (PAT) decreased to Rs 527 crore in FY23 compared to Rs 561 crore in FY22.
Overall, revenue increased by 11.33 per cent, whereas PAT declined by 6.1 per cent.
