Rubicon Research IPO subscribed 51% on Day 1, GMP signals strong listing: Should you apply?

According to IPO Watch, the unlisted shares of the company were trading with more than 19 percent GMP over the IPO price.

Key things to know about Rubicon Research IPO:

Rubicon Research launched its initial public offering to raise Rs 1,377.50 crore through a fresh issue of shares worth Rs 500 crore and an offer for sale (OFS) of shares worth Rs 877.5 crore worth shares by promoter General Atlantic Singapore RR. The price band for the IPO has been set at Rs 461-485 per share, and the issue will remain open for public bidding between October 9 and October 13.

Investors can bid for a minimum of 30 shares, requiring an investment of Rs 14,550, and in multiples thereafter. The allotments will likely be finalized by October 14, and the shares are scheduled to debut on stock markets on October 16.

Rubicon Research IPO anchor book:

A day before the IPO opened for public bidding, Rubicon Research announced that it has raised Rs 619.08 crore from 32 anchor investors on October 8. Global marquee investors like Goldman Sachs, Fidelity, Nomura Funds, Amansa Holdings, Societe Generale, University of Notre Dame, and GP Emerging Markets Strategies invested in the company, along with eight domestic mutual funds including PGIM India, Mirae Asset, Bajaj Finserv, Kotak Mahindra AMC, HDFC AMC, and ICICI Prudential Mutual Fund.

How will the IPO proceeds be used?

Rubicon Research aims to use Rs 310 crore of the fresh issue proceeds for repayment of its certain borrowings, and the remaining amount for inorganic growth through unidentified acquisitions and general corporate purposes.

Should you apply for Rubicon Research IPO?

HDFC Securities in its note said that Rubicon Research was the fastest growing Indian pharmaceuticals formulations company between fiscal years 2023 and 2025, with a total revenue CAGR of 75.89%, which was over seven times higher than the average of 11 companies.

“Rubicon Research has established robust sales and distribution capabilities in the US, anchored by its wholly-owned subsidiary, AdvaGen Pharma. AdvaGen markets non-branded prescription products to a diverse customer base that includes wholesalers, group purchasing organizations (“GPOs”), and pharmacy chains,” it said.

The strong grey market estimates indicate investor appetite in India's export-oriented pharmaceutical sector, said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara. "With almost 98% of revenues derived from the U.S., the company exhibits robust international competitiveness, although geopolitical and regulatory risks exist...The IPO highlights the appeal of a scalable, high-margin business, offering investors a chance to diversify into markets enjoying foreign inflows and long-term growth opportunities," he added.

Despite having a higher valuation compared to its peers, Rubicon Pharma is commanding a high GMP due to the higher ROCE and high growth which is also reflected in the rapid deleveraging it is undertaking which will help improve margins further, said Shravan Shetty, Managing Director, Primus Partners.

Kalp Jain, Research Analyst at INVasset PMS, meanwhile said, "Specializing in specialty and generic pharmaceutical formulations, Rubicon Research has a strong US presence, with 98% of revenue derived from that market, supported by 72 approved ANDAs and 9 NDAs from the USFDA. While growth prospects remain robust, high dependence on the US market poses concentration risks that investors should consider. Overall, the strong grey market premium and positive early subscription trends indicate a promising listing, reflecting market optimism around the firm’s financials and pipeline potential."

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