Emcure Pharmaceuticals Ltd IPO Review: Emcure Pharmaceuticals is planning an IPO of INR 1,952.03 crores, which will include a fresh issue of INR 800 crores and an offer to sell 1.152.03 crores of existing equity shares. The monies obtained will be used for repayment, payback of loans, and general corporate operations.
Emcure Pharmaceuticals Ltd IPO – Important Dates
Emcure Pharmaceuticals IPO Date
July 3, 2024 to July 5, 2024
Emcure Pharmaceuticals IPO Listing Date
July 10, 2024
Emcure Pharmaceuticals IPO Price
INR 960-1008 per share
Emcure Pharmaceuticals IPO Lot Size
14 shares
Emcure Pharmaceuticals IPO Total Issue Size
INR 1,952.03 crores
Emcure Pharmaceuticals IPO Basis of Allotment
July 8, 2024
Emcure Pharmaceuticals IPO Initiation of Refunds
July 9, 2024
Emcure Pharmaceuticals IPO Credit of Shares to Demat
July 9, 2024
Emcure Pharmaceuticals IPO Issue Type
Book Built Issue IPO
Emcure Pharmaceuticals IPO Listing At
BSE, NSE
Emcure Pharmaceuticals Ltd IPO – Company Profile
Emcure Pharmaceuticals, a well-known Indian pharmaceutical firm, focuses in the research, development, and global marketing of a varied product line. They are ranked 13th in India and fourth globally in terms of market share, and they are the domestic leader in gynecology and HIV antivirals, thanks to skilled promoters and a devoted management team.
Through international distribution and strategic relationships, the company is able to expand its differentiated product offering to over 70 countries. The diverse product portfolio and global presence provide a strong business model that encourages organic growth, brand expansion, acquisitions, and in-licensing relationships.
Emcure Pharmaceuticals has 13 cutting-edge manufacturing facilities in India that enable the creation of a wide range of pharmaceutical and biopharmaceutical products, such as oral solids, injectables, and biotherapeutics. Vertical integration offers cost-effective production, quality control, and intellectual property protection for niche items. The managing director of the company is Mr. Satish Ramanlal Mehta.
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Emcure Pharmaceuticals Ltd IPO- Fundamental Analysis
Emcure Pharmaceuticals’ fundamental analysis shows a mixed performance. Revenue has constantly increased, implying expansion. However, diminishing profitability, EPS, and RoNW point to difficulties in generating returns, despite enhanced liquidity and higher total assets.
Revenue Trend: Revenue rose from ₹58,553.87 million in March 2022 to ₹59,858.11 million in March 2023. The revenue for the current fiscal year’s 12-month period ending March 2024 is INR 66,582.51 million, exceeding the previous year’s annual benchmark.
Equity and Liabilities: Both equity and total liabilities have consistently increased over time, indicating future growth and expansion.
Profitability: The profit after tax (PAT) declined from ₹7,025.56 million in March 2022 to ₹5,275.75 million in March 2024. Investors may be concerned about the fall in profitability.
Earnings per Share (EPS): The diluted EPS declined from ₹36.62 in March 2022 to ₹27.54 in March 2024, indicating fewer earnings per share for investors.
Return on Net Worth (RoNW): The RoNW has decreased from 33.32% to 16.87%, suggesting a fall in the company’s capacity to create returns on shareholder equity.
Financial Position: Total assets have increased, indicating future business growth. However, the current ratio has risen, indicating stronger liquidity and probable difficulties in satisfying short-term obligations.
Emcure Pharmaceuticals Ltd IPO Financial Analysis
Particular
As of 31 March 2022
As of 31 March 2023
As of 31 March 2024
Revenue (₹ in Million)
58,553.87
59,858.11
66,582.51
Equity (₹ in Million)
21,141.42
26,496.60
31,217.65
Expenses (₹ in Million)
49,463.12
52,783.55
59,780.82
Profit and Loss After Tax (₹ in Million)
7,025.56
5,618.45
5,275.75
RoNW (%)
33.32
21.27
16.87
NAV per Equity Share (₹)
109.90
138.30
163.22
Diluted EPS only (₹)
36.62
29.42
27.54
Total Assets (in millions)
60,634.69
66,725.31
78,061.63
Total Liabilities (in millions)
39,493.27
40,228.71
46,843.98
Current Ratio
1.15
1.27
1.33
Emcure Pharmaceuticals Ltd IPO Peer Comparison
Emcure Pharmaceuticals has a solid revenue of ₹59,858.11 million, indicating competitive financials. Among peers, Abbott India stands out with high EPS and RoNW, whilst Dr. Reddy’s Laboratories has a great P/E and NAV, giving investors a variety of options to explore.
Company
Revenue (₹ in million)
Face Value per Equity Share (₹)
P/E
EPS (Basic) (₹)
EPS (Diluted) (₹)
RoNW (%)
NAV per Equity Share (Basic) (₹)
Emcure Pharmaceuticals Limited
59,858.11
10
NA
29.42
29.42
21.27
138.30
Dr. Reddy’s Laboratories Limited
246,697.00
5
20.45
271.47
270.90
19.36
1,398.33
Cipla Limited
227,531.20
2
34.55
34.72
34.69
11.97
290.01
Alkem Laboratories Limited
115,992.60
2
58.25
82.31
82.31
10.88
756.52
Torrent Pharmaceuticals Limited
96,201.50
5
55.66
36.79
36.79
20.09
183.13
Mankind Pharma Limited
87,494.33
1
57.80
32.00
32.00
17.24
185.61
Abbott India Limited
53,487.30
10
51.10
446.78
446.78
29.78
1,500.54
J. B. Chemicals & Pharmaceuticals Limited
31,492.83
2
55.72
26.50
26.17
16.52
320.55
Emcure Pharmaceuticals Ltd IPO Objective
Emcure Pharmaceuticals Limited’s IPO aims to repay and prepay all or a portion of the company’s outstanding borrowings.
Repayment and prepayment of all or a portion of certain outstanding borrowings availed by the company: The company intends to spend INR 640 crores of the Net Proceeds to prepay certain debts, with varying due amounts and periods. Maturity, expenses, conditions, fines, legal compliance, and commercial concerns are all factors that influence the decision to repay or prepay in borrowing arrangements.
General Corporate Purposes: The net proceeds will be used for general corporate reasons, such as funding organic and inorganic expansion, strengthening marketing and brand building, capital expenditures for operational maintenance, investing in subsidiaries, and resolving continuing corporate contingencies.
Emcure IPO Risks and Challenges
Emcure Pharmaceuticals’ risk factors include regulatory compliance, potential product recalls, supply chain disruptions, and reliance on local distributors. Regulatory changes, compliance concerns, and approval delays can all have a negative impact on business operations, financial conditions, and results.
The pharmaceutical company follows regulations issued by numerous global agencies. While previous inspections revealed no issues, a 2019 USFDA warning letter triggered corrective action. Recalls were issued owing to contamination and packaging difficulties. Ongoing compliance is critical for avoiding regulatory proceedings and product liability claims.
Emcure Pharmaceuticals works in a highly regulated industry that requires numerous permits and approvals. Failure to secure or maintain these clearances, compliance concerns, or regulatory changes could have a negative impact on business operations, financial conditions, and outcomes. Delays in product approvals and reliance on local distributors increase the dangers.
Supply chain disruptions or price rises in outsourced raw materials and finished goods can have a detrimental influence on Emcure Pharmaceuticals’ product supply, pricing, and overall business, resulting in worse cash flows, financial conditions, and operational performance.
Emcure Pharmaceutical IPO – Industry & Market Potential
The global pharmaceutical sector, which was previously centered in high-income nations, has expanded significantly in middle-income countries such as India and China. These “Pharmerging” markets are critical for international corporations, with significant increases in pharmaceutical exports, despite high-income countries lead in R&D spending.
As the world’s population exceeds 8 billion by 2023, per capita medicine consumption climbs, led by growing economies such as China, India, Brazil, and Indonesia. Improved healthcare infrastructure, higher income, and expanded insurance coverage are all contributing to a narrower gap with developed markets. Continued investment will affect future growth.
The increased prevalence of noncommunicable diseases, an expected 10-11% CAGR in the chronic category from FY2023 to FY2028, population expansion, and government measures like as the PLI plan to boost domestic ingredient manufacturing are all major growth drivers for the Indian pharmaceutical business.
Emcure Pharmaceuticals Ltd IPO – Type of Offer
Emcure Pharmaceuticals intends to raise INR 800 crores through a new share offering to meet the company’s financial requirements. In addition, the business proposes a tender offer to sell 1,152.03 crore of its existing shares.
1. Fresh Issue: The corporation plans to raise funds by issuing additional shares, with the goal of collecting INR 800 crore. The proceeds from the new issue will be used to repay debt, retire borrowings, and for general corporate purposes.
2.Offer for sale: Emcure Pharmaceuticals is seeking to sell 1,152.03 crore of its existing shares. The following are the details of the current shareholders who are also the promoters selling the shares:
Name of the promoter selling shareholder
Maximum number of offered shares for sale (in millions)
Satish Ramanlal Mehta
1,730,000
Sunil Rajanikant Mehta
40,000
Emcure IPO Allotment Structure
Emcure Pharmaceuticals will allocate 50% to Qualified Institutional Buyers (QIB), 15% to Non-Institutional Investors (NII), and 35% to Retail Individual Investors (RII) in accordance with SEBI requirements. A portion of the proceeds are also set aside for qualifying employees.
Qualified Institutional Buyers (QIB): According to SEBI norms, 50% of the shares offered in the IPO would be reserved for Qualified Institutional Buyers. These include banks, mutual funds, and insurance businesses.
Non-Institutional Investors (NII): Non-institutional investors will receive 15% of the shares. These often include corporate entities or individuals who invest more than Rs.2 lakhs.
Retail Individual Investors (RII): The remaining 35% of the shares will be allocated to retail individual investors. These individual investors apply for shares worth less than Rs. 2 lakhs.
Eligible Employees: A portion of the issue is set aside for qualifying employees.
Emcure Pharmaceuticals Ltd IPO: Should you Apply or Not?
Following the IPO, the company’s price to earnings multiple will be 36.07 times, with an earnings per share of Rs 27.95. So, should you apply?
Here’s what key brokerages have to say:
Anand Rathi
Analysts at Anand Rathi stated that the research and development-driven company has a differentiated product portfolio that includes orals, injectables, and biotherapeutics, allowing it to reach a wide range of target markets in over 70 countries, including India, Europe, and Canada.
In terms of valuation, the company is attractively priced at an upper band of 36x post-equity share issuance on an FY24 earnings basis. Analysts feel the company has room for growth based on market tailwinds and business scalability.
The brokerage advised investors to subscribe to the IPO with a long-term perspective.
Swastika Investmart
The brokerage maintained that Emcure has consistently grown its top line, despite a minor drop in recent profitability due to interest expenditures and depreciation.
Analysts cautioned that some significant dangers must be carefully considered. They stated that the pharmaceutical sector is heavily regulated, and Emcure confronts significant disruptions to its raw material supply chain. Furthermore, the corporation relies on third parties for product marketing and delivery.
“Considering the company’s strengths, growth trajectory, and potential for debt reduction post-IPO, we believe the P/E valuation of 36.6x is reasonable.” “We recommend applying for this IPO with a long-term perspective,” the brokerage stated in its IPO note.
Below are the brokerage recommendation for Emcure Pharmaceuticals Ltd IPO:
Emcure Pharmaceuticals Ltd IPO FAQs
1. What is the allotment date of the Emcure Pharmaceuticals IPO?
The allotment date of the Emcure Pharmaceuticals IPO is July 8, 2024.
2. What is the price band of the Emcure Pharmaceuticals IPO?
The price band of the Emcure Pharmaceuticals IPO shares issued by the company is INR 960-1008 per share.
3. What is the size of the Emcure Pharmaceuticals IPO?
The Emcure Pharmaceuticals IPO has a total offer size of INR 1,952.03 crore, which includes a fresh issue of 800 crore shares and an offer to sell 1,152 crore shares. The monies raised will be utilized for repayment, payback of loans, and general corporate reasons for the company.
4. What is the listing date of the Emcure Pharmaceuticals IPO?
The listing date of the Emcure Pharmaceuticals IPO issue is July 10, 2024.
Note: The information associated with the IPO is for educational purposes only. Consider with your financial advisor before investing in an IPO.
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