Investor Frenzy for Emcure Pharma IPO on Day 2: Top 10 Key Risks and Financials Before You Dive In

Emcure Pharmaceuticals’ IPO saw a huge response on its second day, with strong interest from various types of investors, including individual and institutional buyers. Here’s what you need to know before considering this investment.

Emcure Pharmaceuticals IPO Overview

Dates and Pricing:

ADVERTISEMENT

• The IPO, priced between ₹960 and ₹1,008 per share, opened for subscription on July 3 and will close on July 5.

Offer Details:

• Emcure plans to raise ₹1,952 crore through this IPO. This includes ₹800 crore from new shares and ₹1,152 crore from shares sold by existing shareholders like BC Investments IV and promoter Satish Mehta.

Use of Funds:

• The money raised will help repay debts and support general business needs.

Emcure Pharmaceuticals IPO Details

Here are ten important points from the Red Herring Prospectus (RHP) that you should know:

1. Promoters:
   • Key promoters include Satish Mehta, Sunil Mehta, Namita Thapar, and Samit Mehta. Other sellers include BC Investments IV and several individuals from the Mehta family.
2. Competitors:
   • Emcure’s competitors include Torrent Pharmaceuticals, Mankind Pharma, Abbott India, and others with varying price-to-earnings ratios (P/E).
3. Company Profile:
   • Founded in 1981, Emcure develops, produces, and markets various pharmaceutical products globally. It ranks fourth in its covered markets and is prominent in gynaecology and HIV therapy in India.
4. Industry Outlook:
   • The global pharma market is expected to grow 5.0%-5.5% annually until 2028. India’s market for pharmaceuticals is projected to grow 8%-9% annually through 2029.
5. Group Companies:
   • Emcure’s group includes Uth Beverage Factory, Avet Lifesciences, and others.
6. Subsidiaries:
   • The company has multiple subsidiaries involved in various aspects of pharmaceutical development and marketing.
7. Manufacturing Facilities:
   • Emcure operates 13 manufacturing plants and 5 research and development centres in India.
8. Financial Performance:
   • Domestic revenue represented over 50% of total income as of September 2023. Revenue in India has grown at a compound annual growth rate of 10.80% since 2019.
9. IPO Risks:
   • Risks include potential issues with manufacturing or quality control, which could harm the company’s reputation and financial health. There are also risks related to product liability.
10. Lock-in Period for Anchor Investors:

• Equity shares allotted to anchor investors have a 90-day lock-in for 50% of the shares and a 30-day lock-in for the remaining 50%.

Final Considerations

Investing in Emcure Pharmaceuticals’ IPO involves understanding both the opportunities and the risks associated with the company. Make sure to review these points before deciding whether to subscribe.