IPO: Emcure Pharma subscribed 133% on the first day, GMP 29%, should you bet on Namita Thapar’s company?

Emcure Pharmaceuticals IPO Review :The IPO of Shark Tank judge Namita Thapar’s company Emcure Pharmaceuticals has been subscribed 131 percent on its first day today on July 3, 2024. It will remain open for subscription till July 5. On the first day of the IPO, craze is also being seen in the grey market. The brokerage house has advised subscription in this IPO for a long term. The price band of this IPO is Rs 960-1008 per share and the lot size is 14 shares.

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133% subscribed till now

Emcure Pharmaceuticals’ IPO was subscribed 133 percent or 1.33 times overall on its first day. 35 percent of the IPO is reserved for retail investors and it has been subscribed 1.38 times so far. 50 percent of it is reserved for qualified institutional buyers (QIB) and it has been subscribed only 7 percent so far. While 15 percent is reserved for non-institutional investors (NII) and it has been subscribed 2.67 times so far. The reserved portion for employees has been subscribed 2.22 times.

Grey Market Premium (GMP)

There is a craze in the grey market for the unlisted stock of Emcure Pharmaceuticals on the first day of its IPO. The unlisted stock of the company is seen at a price of Rs 295 in the grey market, which is a 29 percent premium over the upper price band of Rs 1008.

Subscribe for a long term

Brokerage house Geojit says that Emcure Pharma’s IPO can be subscribed from a long-term perspective. At the upper price band of 1008, Emcure Pharma is available at EPL P/E of 36x (FY24), which looks fully priced. Given its strong research and development expertise in differentiated products, established domestic and international presence, strong focus on the healthcare market for women, improving profitability after the IPO and diversified product portfolio, the brokerage has recommended subscription in it for the mid to long term.

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Company Strength

• Well positioned to take advantage of leverage in the domestic market
• Demonstrated capabilities of building brands
• Large, diversified and rapidly growing product portfolio in international markets
• Strong research and development capabilities drive a differentiated portfolio of products.
• Extensive and diversified manufacturing capacity

The main strategy of the company

• Increasing market share in the domestic market.
• Continue to invest in research and development and manufacturing capabilities to enhance and develop a differentiated product portfolio.
• Deepening and expanding international presence with a focused go-to-market approach.
• Pursuing strategic acquisitions, partnerships and in-licensing arrangements.

Risk with the company

A significant portion of domestic revenues, 57 per cent in FY14, comes from acute therapies, which are subject to strong competition.

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About IPO

Emcure Pharmaceuticals plans to raise Rs 1952.03 crore through its IPO. The IPO will see the issuance of new equity shares worth Rs 800 crore. While there is also an OFS of equity shares worth Rs 1152.03 crore by promoters and existing shareholders. Investors giving up their stake under the OFS include promoters Namita Thapar and Satish Mehta and investor BC Investment IV Ltd, an affiliate of US-based private equity major Bain Capital. Shark Tank fame Namita Thapar will earn around Rs 127 crore through stake sale under the OFS.

Where will the funds be used

Pune-based firm Emcure Pharmaceuticals Ltd is a pharmaceutical company engaged in developing, manufacturing and globally marketing a wide range of pharmaceutical products across therapeutic areas. Funds raised from the IPO will be used for repayment and/or prepayment of all or a portion of certain outstanding borrowings. A portion will also be used for general corporate purposes.