The initial public offering (IPO) of Emcure Pharmaceuticals opens for bidding on Wednesday, July 3 and can be subscribed until Friday, July 5. The Shark Tank India fame Namita Thapar-backed company is offering its shares in the range of Rs 960-1,008 apiece. Investors can apply for a minimum of 14 equity shares and its multiples thereafter.
Emcure Pharmaceuticals, which was incorporated in 1981, is a homegrown pharmaceutical company which develops, manufactures, and globally markets a wide range of pharmaceutical products across several major therapeutic areas. Emcure Pharmaceuticals has 13 manufacturing facilities in India.
The Rs 1952.03 crore primary stake sale of Emcure Pharma includes a fresh share sale of Rs 800 crore and an offer-for-sale (OFS) of 1,14,28,839 equity shares by its promoters and existing shareholders. The net proceeds from the fresh issue shall be utilized towards repayment/prepayment of certain outstanding borrowings availed by the company; and general corporate purposes.
Emcure Pharma has raised Rs 582.6 crore via an anchor book as it allocated 57,79,850 shares to anchor investors at Rs 1,008 apiece. Abu Dhabi Investment Authority, Goldman Sachs, and Morgan Stanley along with various mutual funds houses including SBI, HDFC, ICICI Prudential, Whiteoak Capital, Axis, Kotak, Nippon Life India, Mirae, and Motilal Oswal participated in the anchor book.
Emcure Pharma has been ranked 13th in domestic sales among pharmaceutical companies in India for MAT September 2023 and fourth in market share in its covered markets for the same period. Additionally, it is the leading pharmaceutical company in gynaecology and HIV antiviral therapeutic areas for the MAT September 2023.
Pune-based Emcure Pharma reported a net profit of Rs 527.58 crore with a revenue of Rs 6,715.24 crore for the financial year ended on March 31, 2024. The company's net profit came in at Rs 561.85 crore with a revenue of Rs 6,031.72 crore for the financial year 2022-23.
As of September 30, 2023, Emcure Pharma employed 552 scientists and operated five research facilities in India. They filed over 1,800 documents globally, including 204 in the EU and 133 in Canada. They had 201 granted patents, 33 pending patent applications, and submitted 102 drug master files.
Emcure Pharma has reserved 1,08,900 shares for the eligible employees of the company, who will get a discount of Rs 90 per share. It has reserved 50 per cent of the issue for the qualified institutional bidders (QIBs), while non-institutional investors have 15 per cent of the net offer. Remaining 35 per cent of the net offer shall be allocated towards retail investors.
Kotak Mahindra Capital Company, Axis Capital, JP Morgan India and Jefferies India are the book running lead managers of the Emcure Pharma IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with Wednesday, July 10 as the tentative date of listing. Here's what brokerage firms say about the IPO of Emcure Pharma:
Anand Rathi Research Rating: Subscribe for long term Emcure Pharmaceuticals is engaged in developing, manufacturing and globally marketing a broad range of pharmaceutical products across several major therapeutic areas. We believe that the company has a scope of business improvement on the back of industry tailwinds and business scalability, said Anand Rathi Research.
"It is a research and development driven company with a differentiated product portfolio including orals, injectables and biotherapeutics, which has enabled the company to reach a range of target markets across over 70 countries, with a strong presence in India, Europe and Canada. On the valuation front, the issue is fairly priced," it added with a 'subscribe for long term' tag.
Reliance Securities Rating: Subscribe Emcure Pharma is the one of the top companies in covered markets and market leader in gynecology therapeutic areas with a strong domestic and international presence. EPL will focus on pharmaceutical products used in chronic therapeutic areas which are expected to register higher growth than acute therapeutic areas over the next five financial years, said Reliance Securities.
Emcure's significant investments in new manufacturing facilities and initiatives to increase sales force effectiveness will drive higher growth in the coming years building strong brands. With increasing life expectancy, rising chronic disease incidence, and improving awareness, domestic growth will remain strong, said the brokerage with a 'subscribe' rating for the issue.
Arihant Capital Markets Rating: Subscribe Emcure Pharma is a major player in the pharmaceutical industry, having niche products for key therapies with a global market presence. The company is in a position to leverage its market position and expand rapidly. Though the topline has been growing gradually, there has been a dip in profitability mainly due to high finance costs, said Arihant Capital Markets.
"As the company plans to repay its borrowings with the proceeds, the bottom line is expected to see substantial improvement. At the upper price band, the issue is valued at 36.07 times P/E based on FY24 earnings. We recommend 'subscribe' to the issue," it added.
Nirmal Bang Securities Rating: Subscribe Emcure Pharma has delivered steady performance over the last few years with topline growth of 6-7 per cent CAGR whereas bottomline has seen de-growth on account of increase in both employee cost as well as other operating expenses. Repayment of borrowings is expected to improve the company's profitability in the years ahead, said Nirmal Bang Securities.
"Investment in human capital as well as operational capabilities is expected to drive growth for the future. The issue is valued at EV/Ebitda of 16.7 times based on FY24 financials, at discount when compared with average peer valuation of 27.4 times. We expect the company to deliver growth on account of its focus on the chronic segment which is expected to be a high growth category in the future," it added with a subscribe rating.
Swastika Investmart Rating: Subscribe for long term Emcure Pharma boasts a large, diversified, and fast-growing product portfolio, coupled with proven brand-building capabilities and strong R&D infrastructure. Emcure has demonstrated consistent top-line growth, although recent profitability has seen a slight decline due to interest expenses and depreciation, said Swastika Investmart.
However, the pharmaceutical industry is highly regulated, and Emcure faces potential disruptions to its raw material supply chain. Additionally, the company relies on third parties for product marketing and distribution. Considering the company's strengths, growth trajectory, and the potential for debt reduction, we view the P/E valuation reasonable, it added with a 'subscribe' rating.
StoxBox Rating: Subscribe 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, said StoxBox.
"Emcure anticipates a substantial improvement in its bottom line as it plans to repay its borrowings with the proceeds. The issue is valued at a P/E 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," it added.
SBICap Securities Rating: Subscribe for long term Emcure Pharma is valued at FY24 P/E multiple of 36.1 times based on the post-issue capital. The company has strong domestic presence with leadership positions across key brands. Increased geographic penetration will help to grow the company’s topline, while debt reduction from proceeds of the issue will augment profitability, said SBICap Securities with a 'subscribe for long term' rating
Canara Bank Securities Rating: Subscribe Emcure Pharmaceuticals, originating as a Pune-based contract manufacturer of pharmaceuticals and APIs, has successfully diversified into the generic medicine market across therapeutic areas like gynaecology, gastroenterology, and cardiovascular diseases, said Canara Bank Securities.
"Emcure Pharmaceuticals stands as a resilient player in the global pharmaceutical sector, leveraging its market leadership in India, expansive international footprint, strong R&D focus, and prudent financial management to sustain growth and profitability in the years ahead. With a P/E ratio of 36.6x, the issue is reasonably priced as compared to other listed peers," it said with a subscribe tag.
Sushil Finance Rating: Subscribe with caution Emcure Pharma is asking for a PE multiple of 36.6 times on the upper end of the price band and using diluted EPS for FY24 at Rs 27.54, which seems fully priced. The P/BV is at 6.17 times for FY24, said Sushil Finance. "Looking at all the factors, risks, opportunities and a high valuation, investors may subscribe for the issue with a medium to long-term view," it said.
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