Bain Capital-backed Emcure Pharmaceuticals refiles IPO papers with reduced issue size

Emcure Pharmaceuticals refiles IPO papers

Pune-based Emcure Pharmaceuticals has refiled its preliminary papers with the capital markets regulator SEBI for the fund raising via initial public offering.

The IPO is a mix of fresh issuance of shares worth Rs 800 crore, and an offer-for-sale (OFS) of 1.37 crore equity shares by the existing shareholders, which both are lower in size compared to previous fund raising plan.

Promoters and promoter group including Satish Ramanlal Mehta, and Sunil Rajanikant Mehta will be selling 49.85 lakh equity shares in the OFS, while investor BC Investments IV will be offloading 72.34 lakh equity shares, as per the draft papers filed on December 16.

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

Promoters hold 82.97 percent 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, shareholding of 13.09 percent.

Earlier, Emcure Pharma had filed draft papers for its IPO in August 2021 which was comprised a fresh issue of Rs 1,100 crore, and an OFS of 1.8 crore equity shares. And the fund raising was proposed to be in the range of Rs 4,500-5,000 crore, as per sources.

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

The subdued market conditions can be one of the reasons and the pharma sector itself was underperformer since October 2021 till March 2023.

The equity market conditions were subdued in 2022 post the Ukraine-Russia war, inflation worries, and rising interest rate scenario globally. In fact, after October 2021 highs, the Nifty Pharma index corrected nearly 23 percent till the bottoming out in the middle of March 2023, and in the same period, the Nifty 50 index was down just 9.5 percent.

The India's 13th largest pharmaceutical company intends to utilise net fresh issue proceeds mainly for repaying of debts amounting to Rs 640 crore, apart from general corporate purposes. Its total borrowings stood at Rs 2,012.9 crore as of September 2023.

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

With a differentiated product portfolio that includes orals, injectables and biotherapeutics, the company said domestic sales contributed 50.84 percent to revenue from operations in FY23, and the remaining business is contributed by exports, while domestic and exports business contribution to revenue for the six months period ended September FY24 stood at 53.16 percent and 46.84 percent, respectively.

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Its financial performance was weak in the last financial year but the said improved in the current financial year.

Net profit declined 20 percent on-year to Rs 561.8 crore in the year ended March FY23 due to tepid business growth and weak operating numbers. Revenue from operations increased by 2.2 percent to Rs 5,986 crore, but EBITDA (earnings before interest, tax, depreciation and amortisation) fell by 11.2 percent to Rs 1,181.2 crore with margin declining 300 bps at 19.7 percent during the same period.

For six months period ended September FY24, net profit surged 31.3 percent to Rs 286.8 crore and revenue rose by 15.3 percent to Rs 3,219.3 crore compared to same period in previous financial year.

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