Emcure Pharma IPO: Should You Subscribe? Check Price, GMP, Lot Size, Recommendations

Emcure Pharma IPO: The initial public offering of Emcure Pharmaceuticals Ltd, which is backed by Bain Capital, has been opened for public subscription today, July 3. The Rs 1,952-crore IPO will conclude on July 5. The price band of the IPO has been fixed at Rs 960-Rs 1,008 per share. In the first hour of bidding till 10:57 am on Wednesday, the Rs 1,952.03-crore IPO received a 31 per cent subscription garnering bids for 41,43,650 shares as against 1,34,86,320 shares on offer.

The quota for non-institutional investors received 43 per cent subscription, while retail individual investors (RIIs) portion got subscribed 42 per cent.

A day before its IPO, Emcure Pharmaceuticals on Tuesday garnered Rs 583 crore from anchor investors.

The IPO allotment will take place on July 8, while its shares will likely be listed on BSE and NSE on July 10. The bidding for anchor investors will open for a day on July 2.

Investors need to apply for a minimum of 14 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,112 (14 (lot size) x Rs 1,008 (upper price band)).

Emcure Pharma IPO GMP Today

According to market observers, unlisted shares of Emcure Pharma Ltd are trading Rs 299 higher in the grey market as compared with its issue price. The Rs 299 grey market premium or GMP means the grey market is expecting a 29.66 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.

‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.

Emcure Pharma IPO: Analysts’ Recommendations

Analysts have given ‘subscribe’ recommendations with a long-term horizon to the Emcure Pharma IPO.

Brokerage firm Anand Rathi in its note said, “Emcure Pharmaceuticals has a strong focus in the women’s healthcare market, and it is a market leader in the gynecology therapeutic area in the IPM, with a 13.53 per cent market share, in terms of domestic sales for MAT FY24. The company’s market share was 1.70 times the market share of the next largest competitor in this therapeutic area in the IPM.”

On the valuation front, the brokerage said that at an upper band, Emcure is fairly priced at P/E of 36x post issue of equity shares on FY24 earning basis. It added that the company has a scope of business improvement on the back of industry tailwinds and business scalability.

“We recommend an ‘SUBSCRIBE – long term’ rating to the IPO,” Anand Rathi stated.

Another brokerage Swastika in its note said, “Emcure Pharmaceuticals is a prominent player in the domestic and international pharmaceutical markets. The company boasts a large, diversified, and fast-growing product portfolio, coupled with proven brand-building capabilities and strong R&D infrastructure.”

Emcure has demonstrated consistent revenue growth, although recent profitability has seen a slight decline due to interest expenses and depreciation, Swastika said.

Risks: However, some key risks require careful consideration, Swastika stated. The pharmaceutical industry is highly regulated, and Emcure faces potential discruptions to its raw material supply chain. Additionally, the company relies on third parties for product marketing and distribution, said the brokerage.

“Considering the company’s strengths, growth trajectory, and the potential for debt reduction post-IPO, we view the P/E valuation of 36.6x as reasonable. We recommend applying for this IPO with a long-term view,” Swastika said in the note.

Another brokerage Reliance Securities in its note on the Emcure Pharma IPO said, “With improving life expectancy, rising incidence of chronic diseases, and improving awareness will keep the domestic tailwinds stronger, deepening the international presence with a focused Go to market approach will improve the financial matrix over the years. Hence, we recommend a SUBSCRIBE to the issue.”

Emcure Pharma IPO More Details

The IPO comprises fresh issuance of equity shares worth Rs 800 crore and an Offer For Sale (OFS) of 1.14 crore equity shares to the tune of Rs 1,152 crore, at the upper end of the price band, by promoters and existing shareholders. This aggregates the total public size to Rs 1,952 crore.

Those selling shares in the OFS include promoter Satish Mehta and investor BC Investments IV Ltd, an affiliate of US-based private equity major Bain Capital. Currently, Satish Mehta holds a 41.85 per cent stake in the company and BC Investments owns a 13.07 per cent stake.

Proceeds of the fresh issue will be used towards payment of debt and for general corporate purposes.

Employee portion has been reserved up to 108,900 equity shares in the IPO. Besides, half of the issue size has been reserved for qualified institutional investors (QIBs), 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors.

Further, investors can bid for a minimum of 14 shares and in multiples of 14 shares thereafter.

The Pune-based firm Emcure Pharmaceuticals is engaged in developing, manufacturing, and globally marketing a broad range of pharmaceutical products across several major therapeutic areas.

Kotak Mahindra Capital Company, Jefferies India, Axis Capital, and JP Morgan India are the book-running lead managers to the issue. The equity shares of the company are expected to list on the BSE and NSE on July 10.

Earlier this month, the company received Sebi’s go-ahead to float initial share sale.

Emcure Pharmaceuticals Ltd’s revenue increased 11.33 per cent and profit after tax (PAT) fell 6.1 per cent between the financial year ending with March 31, 2024 and March 31, 2023.