Private equity-backed active pharmaceutical ingredients (API) maker Malladi Drugs and Pharmaceuticals Limited is considering a public market debut and has recently held conversations with investment banks to discuss its IPO plans, which could see the company raise around Rs 1,000-1,200 crore, people aware of the development told Moneycontrol.
Chennai-based Malladi specializes in the manufacturing of APIs, advanced intermediates, and contrast media agents. The company is known as a global leader in the supply of ingredients for nasal decongestants and serves the cough and cold, antihistamines, anti-convulsants, and anti-depressants therapeutic segments.
The sources added that the company’s IPO will primarily be an offer for sale of shares by the company’s private equity investor as well as the promoters. The company currently doesn't need to raise cash to fund its growth, said one of the people.
“They are the largest manufacturer of APIs like ephedrine, pseudoephedrine, phenylephrine and their salts, globally, which cater to the cough and cold therapeutic segments. These products find it difficult to replicate supply chains and they have long and deep relationships with several of their customers. In that way they are fairly insulated from any tariff related headwinds even though the majority of their sales come from exports,” the source added.
Malladi Drugs raised Rs 250 crore from healthcare and pharma focused private equity fund InvAscent. The PE fund currently holds around 22-23 percent stake in the company, the sources cited above said.
To be sure, the sources added that the IPO discussions are in early stages, and the company may take some time before finalising its plans.
Emails sent to Malladi Drugs and InvAscent did not elicit a response till the time of publication.
Malladi Drugs Business
The API maker reported a consolidated revenue of Rs 626.79 crore in FY25, as against a revenue of Rs 673 crore in the previous financial year, data sourced by Moneycontrol from the Registrar of Companies shows.
Malladi’s profit also dipped slightly to Rs 64.76 crore in FY25 from a profit of Rs 75.63 crore in FY24, data shows.
According to a November 14, 2024 report by credit rating agency IndiaRatings, the company derived 90 percent of the revenue from exports in FY24 and the balance from domestic sales. In FY24, Germany, the US, and Mexico contributed 44 percent to the total revenue.
Malladi’s EBITDA (earnings before interest, taxes, depreciation and amortization) grew to Rs 160.2 crore in FY24 (FY23: Rs 129.1 crore) and the margins expanded to 25.7 percent, from 22 percent in FY23. IndiaRatings noted that the improvement in EBITDA margin was led by increased yield from products due to improved/advanced technology, better realization from its contract manufacturing segment.
The credit rating agency expects the margins to remain at 22-24 percent in the medium term, on the back of stable order book and operating efficiencies
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