Emcure Pharmaceuticals IPO: 10 key risks investors should consider before subscribing to the 1,952-crore issue

Emcure Pharmaceuticals IPO sails through first day of bidding smoothly led by non institutional and retail investors. The Pune-based firm’s issue get fully subscribed on the day 1 itself.

The IPO consists of a new issue of equity shares valued at ₹800 crore and an offer of sale (OFS) by promoters and current shareholders for 1.14 crore equity shares, valued at ₹1,152 crore, at the top end of the price range. The overall public size as a result comes to ₹1,952-crore.

Among those selling shares in the OFS are investor BC Investments IV Ltd., a division of US-based private equity behemoth Bain Capital, and promoter Satish Mehta. Right now, BC Investments has 13.07% of the company’s equity, while Satish Mehta has 41.85%.

The new issue’s proceeds will be applied to general company operations and debt repayment.

Brokerage firms have estimated that the company’s post-issue market capitalisation will exceed ₹19,000 crore, according to news reports.

A wide range of pharmaceutical treatments spanning numerous important therapeutic areas are developed, manufactured, and marketed internationally by Emcure Pharmaceuticals, a Pune-based company.

Here are some of the key risks listed by the company in its Red-Herring Prospectus (RHP):

• The company’s reputation, business, financial situation, and operational outcomes might all suffer as a result of manufacturing or quality control issues. They could also be the target of regulatory action, lawsuits, and other penalties.
• Product liability lawsuits may arise from the company’s noncompliance with appropriate quality standards, thereby having a negative impact on its operations, cash flows, business, and financial standing.
• The production and research and development operations of the organisation are vulnerable to operational hazards. Their business, financial situation, and operational outcomes might be negatively impacted by any halt or delay in their manufacturing or R&D activities.
• The supply and pricing of their products may be negatively impacted by any disruptions in the availability of these resources or by price hikes for the completed goods that they outsource. This might have a knock-on effect on their cash flows, business, financial situation, and operational outcomes.
• The company’s business, financial condition, operational performance, and cash flows might all suffer if they are unable to fulfill their commitments, including financial and other covenants under their debt financing agreements.

Also Read: Emcure Pharma IPO: Here’s what GMP signals ahead of opening for subscription

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