Emcure Pharma IPO receives 1.95x subscription on day 2 So Far; check GMP

Emcure Pharmaceuticals’ IPO  Details

Emcure Pharmaceuticals’ public issue got off to a strong start on its second day of bidding on July 4, driven by non-institutional and retail investors. The Rs 1,952.03-crore public offer was subscribed 1.95 times, with bids for 2.7 crore shares against the 1.37 crore shares available.

The IPO of the pharma company includes a fresh issuance of shares worth Rs 800 crore and an offer-for-sale (OFS) of 1.14 crore shares valued at Rs 1,152.03 crore by existing shareholders, including promoters Satish Ramanlal Mehta, Sunil Rajanikant Mehta, Namita Vikas Thapar, and Samit Satish Mehta.

Strong Start on Day 2
Emcure Pharmaceuticals’ public issue experienced a robust start on its second day of bidding on July 4, driven by non-institutional and retail investors. The Rs 1,952.03-crore public offer was subscribed 1.95 times, with bids for 2.7 crore shares against the 1.37 crore shares available.

IPO Composition

The IPO comprises a fresh issuance of shares worth Rs 800 crore and an offer-for-sale (OFS) of 1.14 crore shares valued at Rs 1,152.03 crore by existing shareholders, including promoters Satish Ramanlal Mehta, Sunil Rajanikant Mehta, Namita Vikas Thapar, and Samit Satish Mehta.

Grey Market Premium (GMP)

According to market observers, unlisted shares of Emcure Pharma Ltd are trading Rs 330 higher in the grey market compared to its issue price. This Rs 330 grey market premium (GMP) indicates a 32.74% expected listing gain from the public issue. The GMP reflects market sentiment and fluctuates accordingly.

Subscription Details

The IPO, which opened for public subscription on July 3, was oversubscribed 1.31 times on the first day. By 10:31 am on July 4, the second day of bidding, the IPO had received 1.86 times subscription, with bids for 2,54,29,880 shares against the 1,37,03,538 shares on offer. The price band for the IPO is set at Rs 960-Rs 1,008 per share.

Investor Categories

– Non-institutional investors: 4.14 times subscription
– Retail individual investors (RIIs): 1.91 times subscription
– Qualified institutional buyers (QIBs): 7% subscription so far

Anchor Investors

A day before the IPO, Emcure Pharmaceuticals raised Rs 583 crore from anchor investors. Notably, Namit Thapar, a Shark Tank judge and executive director of Emcure Pharmaceuticals, is offloading shares worth Rs 128 crore through the IPO.

Key Dates

– IPO allotment: July 8
– Expected listing on BSE and NSE: July 10
– Anchor investor bidding: Opened for a day on July 2

Minimum Investment

Investors need to apply for a minimum of 14 equity shares, resulting in a minimum investment of Rs 14,112 (14 shares x Rs 1,008 upper price band).

Analyst Recommendations

Analysts have given ‘subscribe’ recommendations with a long-term perspective. Brokerage firm Anand Rathi highlights Emcure’s strong focus on women’s healthcare and its market leadership in the gynecology therapeutic area with a 13.53% market share in domestic sales for MAT FY24. They recommend a ‘SUBSCRIBE – long term’ rating, noting the company is fairly priced at a P/E of 36x based on FY24 earnings.

Brokerage Swastika notes Emcure’s strong product portfolio and R&D infrastructure, recommending the IPO for long-term investors despite recent profitability declines due to interest expenses and depreciation. They view the P/E valuation of 36.6x as reasonable considering the company’s growth trajectory and potential for debt reduction post-IPO.

Reliance Securities also recommends subscribing to the issue, citing domestic and international market opportunities and financial improvements over the years.

Use of Proceeds

Proceeds from the fresh issue will be used for debt repayment and general corporate purposes. The employee portion is reserved up to 108,900 equity shares. Half of the issue size is reserved for qualified institutional investors (QIBs), 35% for retail investors, and 15% for non-institutional investors.

Company Background
Pune-based Emcure Pharmaceuticals develops, manufactures, and markets a wide range of pharmaceutical products globally across several major therapeutic areas.