IPO listed on 10 Jul'24
Emcure Pharmaceuticals Ltd
Minimum Investment
₹ 14,112 / 14 shares
Grey market premium
₹ 299 (30% premium)
Issue price
₹ 1008
Listing price
₹ 1,325
Listing day %
35%
Listing on
Jul 10, 2024
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- Emcure Pharmaceuticals Ltd (Emcure) has exhibited modest revenue growth, while its profits have declined over the last two years due to increased interest and depreciation expenses. However, with the IPO's fresh issue primarily aimed at repaying Rs 600 crore in loans, interest expenses are anticipated to decrease, potentially enhancing profitability.
- Major generic pharmaceutical companies have performed well over the past 3 years, thanks to favorable pricing in regulated markets and healthy balance sheets. Emcure, however, has encountered earnings challenges stemming from its debt load and slow growth in key therapeutic areas. Although international markets have shown improvement, profit margins in these regions remain challenging and cyclical due to high competition and price reductions.
- Considering the factors above and the demanding valuation of 37x trailing earnings, it may be prudent to wait for improved operational execution post-listing. Nonetheless, given the healthy grey market premium (GMP), investors with a risk appetite may consider subscribing for potential listing gains.
About the company
Founded in
16 Apr'81
Managing director
Satish Mehta
- Emcure began its operations as a contract development and manufacturing organization (CDMO), primarily serving multinational corporations. Currently, the domestic market accounts for 48% of its sales, ranking it as the 13th largest pharmaceutical company in India by domestic sales.
- Emcure leads the domestic market in the therapeutic areas of gynecology and antivirals, including anti-HIV treatments. It operates 13 manufacturing facilities equipped to produce complex injectables, bio-therapeutics, iron molecules, and cytotoxic products.
STRENGTHS
- Market Leadership: Emcure holds the top position with a market share exceeding 50% for several molecules across various therapeutic areas. This leadership enables the launch of related products and expansion into adjacent therapeutic areas.
- Industry-Beating Growth: Emcure has consistently outperformed the Indian Pharmaceutical Market (IPM). Between MAT (Moving Annual Total) FY2020-2024, its domestic sales achieved a CAGR of 9.7%, surpassing the IPM's CAGR of 8.2%. Similarly, exports recorded a CAGR of 19.5%, outperforming the overall IPM, which had a CAGR of 12.2%.
- Brand-Building Expertise: Emcure has a strong track record in building successful brands, with six ranked among the top 300 highest-selling brands in the IPM for MAT FY2024. Additionally, 26 brands achieved domestic sales of over Rs 50 crore for MAT FY2024.
- Investor-Friendly Company: Emcure is committed to rewarding its investors, consistently paying dividends – 30% for FY22, and 20% for FY23 and FY24.
RISK FACTORS
- Suboptimal Revenue Growth: In the last three years, Emcure's revenue has grown at a modest CAGR of 6.4%, compared to the Indian Pharmaceutical Market (IPM) which grew at 10.3%. This lacklustre growth is primarily due to stagnant performance in the domestic market.
- Declining Operating Profit Margin: The operating profit margin has been consistently declining, dropping from 22.71% in FY22 to 18.47% in FY24.
- Dependence on Export Revenue: A considerable part of Emcure’s revenue is generated from exports, with sales outside India accounting for 51.72% of total revenue in FY24. This exposes the company to risks associated with exchange rate fluctuations, geopolitical tensions, and potential non-compliance with export regulations.
- Legal Challenges: Emcure is involved in various outstanding legal proceedings, including criminal cases, which involve its directors, promoters, and subsidiaries. Any unfavorable outcomes from these proceedings could lead to significant financial losses and liabilities.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 1,952.03 crore
Fresh Issue
₹ 800 crore
OFS
₹ 1,152.03 crore
Price range
₹ 960 - 1,008
Lot size
14 shares
Issue Objective
Emcure plans to utilise the net proceeds from the fresh issue for the following purposes:
- Repaying or prepaying some of the existing loans; and
- General corporate purposes.
Dates
Bidding open
3 Jul'24
Bidding close
5 Jul'24
Allotment date
8 Jul'24
Refund date
9 Jul'24
Listing
10 Jul'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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