Emcure Pharma IPO subscribed 3.36 times on Day 2 so far; GMP inches higher

The initial public offering (IPO) of Emcure Pharmaceutical saw a decent response from the investors during the second day of the bidding process. After being fully subscribed on the first day itself, the issue continued to attract investors from retail, HNI and employee categories.
 

The Pune-based Emcure Pharmaceuticals is selling its shares in the price band of Rs 960-1008 apiece. Investors can apply for a minimum of 14 shares and its multiples thereafter. It is looking to raise Rs 1,952.03 crore via IPO, which includes a fresh share sale of Rs 800 crore and an offer-for-sale (OFS) of 1,14,28,839 equity shares.
 

According to the data, the investors made bids for 4,60,24,300 equity shares, or 3.36 times, compared to the 1,37,03,538 equity shares offered for the subscription by 2.25 pm on Thursday, July 04. The three-day bidding for the issue will conclude on Friday, July 05.
 

The allocation for retail investors was subscribed 2.79 times, while the portion reserved for non-institutional investors saw a subscription of 8.83 times. However, the quota set aside for employees attracted bids for 4.06 times of their reservation, while qualified institutional bidders (QIBs) quota was booked only nine per cent times as of the same time.
 

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 grey market premium of Emcure Pharma has remained firm after the first day of the bidding. Last heard, the company was commanding a premium of Rs 330-340 in the unofficial market, suggesting a listing pop of about 32-34 per cent for the investors. However, the premium in the grey market stood around Rs 300 levels, a day ago.
 

Brokerage firms are mostly positive on the issue suggesting investors to subscribe to it on the back of strong business model, long experience of management, robust market share, plans to reduce debt, reasonable price and positive growth outlook in India and global markets. However, quality risks, regulatory concerns and supply chain disruptions are the key risks for the issue.
 

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. 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 2023-24. The company’s net profit came in at Rs 561.85 crore with a revenue of Rs 6,031.72 crore for FY23.
 

“We believe the company’s strong brand presence in the India market with 70.7 per cent share of specialist Rx for IPM and recent additions in MRs and manufacturing capacity should bode well for its profitable growth over the medium term. The IPO is being offered at discount to its listed peers,” said DRChoksey FinServ with a ‘subscribe’ rating for the issue.
 

Emcure Pharma is available at a P/E of 36 times (FY24), which appears to be fully priced. Given its strong R&D expertise in differentiated products, established domestic and international presence, strong focus on the women’s healthcare market, improved profitability post IPO, and diversified product portfolio, said Geojit Financial Services with a ‘subscribe’ rating.
 

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.
 

The company is looking to utilize the fresh proceeds to pare down their long-term debt and bring it to zero. The company has gone from strength to strength historically with a focus on major therapeutic areas such as gynaecology and is looking to double down on its strengths to fuel its future growth and expand their margins, said Master Capital Services with a ‘subscribe’ rating.
 

Given Emcure’s strategic focus on high-growth therapeutic areas, innovative product portfolio, successful global expansions coupled and solid R&D foundation, it is well-positioned for sustained growth, said Mehta Equities. “Hence, we recommend investors to ‘subscribe’  to the IPO for a long term perspective,” it said.
 

Axis Capital, Kotak Mahindra 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.

 

 

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