Bain Capital-backed Emcure Pharmaceuticals is again filing IPO papers with a reduced issue volume

Emcure Pharmaceuticals IPO | The IPO is a mix of fresh issue of shares worth Rs 800 crore and an offer for sale (OFS) of 1.37 crore shares by the existing shareholders, both of which are smaller compared to the previous fundraising plan.

Pune-based Emcure Pharmaceuticals has re-filed its preliminary documents with capital markets regulator SEBI for raising funds via IPO.

The IPO is a mix of fresh issue of shares worth Rs 800 crore and an offer for sale (OFS) of 1.37 crore shares by the existing shareholders, both of which are smaller compared to the previous fundraising plan.

Promoters and promoter groups, including Satish Ramanlal Mehta and Sunil Rajanikant Mehta, will sell 49.85 lakh equity shares in OFS, while investor BC Investments IV will offload 72.34 lakh equity shares, according to draft papers filed on December 16.

Among others, Arunkumar Purshotamlal Khanna, Berjis Minoo Desai and Sonali Sanjay Mehta will also sell shares in OFS.

The promoters hold 82.97 per cent stake in the company and the rest is held by public shareholders, including BC Investments IV, an affiliate of US-based private equity major Bain Capital, which holds a 13.09 per cent stake .

Previously, Emcure Pharma had filed drafts for its IPO in August 2021, which included a fresh issue of Rs 1,100 crore and an OFS of 1.8 crore shares. According to sources, the fundraising is expected to be between Rs 4,500 and Rs 5,000 crore.

Also read: Flood of IPOs next week | 12 public editions appear on Dalal Street with 8 offerings

The company had also received approval from SEBI to go ahead with IPO plans in December 2021, but did not launch the said IPO on Dalal Street.

The subdued market conditions may be one of the reasons why the pharma sector itself underperformed from October 2021 to March 2023.

Stock market conditions were subdued in 2022 following the Ukraine-Russia war, inflation concerns and the scenario of rising interest rates worldwide. In fact, after peaking in October 2021, the Nifty Pharma index corrected by almost 23 percent until it bottomed out in mid-March 2023, and during the same period, the Nifty 50 index fell by just 9.5 percent.

India's 13th largest pharmaceutical company plans to use the net proceeds from the fresh issue primarily for repayment of debt worth Rs 640 crore, apart from general corporate purposes. Total borrowings stood at Rs 2,012.9 crore in September 2023.

Also read: The IPO of Innova Captab worth Rs 570 crore with a price band of Rs 426-448 will commence on December 21

With a strong presence in India, Europe and Canada, Emcure is the fourth largest pharmaceutical company by market share in the markets covered and the largest pharmaceutical company in gynecology and human immunodeficiency virus (HIV) antiviral therapeutic areas in India.

With a differentiated product portfolio that includes oral drugs, injectables and biotherapeutics, the company said domestic sales contributed 50.84 percent to revenue from operations in FY23. At the end of September, FY24 stood at 53.16 percent or 46, 84 percent.

Also read: IPO Weekly Wrap: DOMS, India Shelter Finance, Inox and 8 SME themes in the market spotlight

Financial performance was weak in the last financial year but has improved in the current financial year.

Net profit fell 20 per cent year-on-year to Rs 561.8 crore in the financial year ended March FY23 due to subdued business growth and weak operating numbers. Operating revenue rose 2.2 percent to Rs 5,986 crore, but EBITDA (earnings before interest, taxes, depreciation and amortization) fell 11.2 percent to Rs 1,181.2 crore, with margin falling 300 basis points to Rs 19,000 in the same period. 7 percent fell.

In the six-month period ended September FY24, net profit rose 31.3 per cent to Rs 286.8 crore and revenue rose 15.3 per cent to Rs 3,219.3 crore compared to the same period last year.

Kotak Mahindra Capital Company, Axis Capital, Jefferies India and JP Morgan India are appointed as merchant bankers for the issue.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com recommends users to check with certified experts before making any investment decisions.

Discover latest business news, Sensex and Nifty updates. Get personal finance insights, tax questions and expert opinions on Moneycontrol or download the Moneycontrol app to stay up to date!