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Emcure Pharma IPO

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The initial public offering (IPO) of Emcure Pharmaceuticals Ltd. opens for bidding on Wednesday, July 3 and can be subscribed till Friday, July 5. The company is offering its shares in the fixed price band of ₹960 to ₹1,008 apiece. Investors can apply for a minimum of 14 equity shares in one lot and its multiples thereafter. The company proposes to use the net proceeds from the fresh issue of Equity Shares worth RS.800 CR to be used towards payment of debt and general corporate purposes.RAISES ₹582 CR FROM ANCHORS Emcure Pharmaceuticals raised ₹582.6 crore from 48 anchor investors on Tuesday, ahead of the launch of its IPO. The company offered over 5.7 million shares at ₹1,008 each.Anchor investors who participated in the round include HDFC Mutual Fund, ICICI Prudential Mutual Fund, SBI Mutual Fund, Aditya Birla Sun Life Mutual Fund, Abu Dhabi Investment Authority, Goldman Sachs Asset Management and Nomura.

Business Overview:

Company is an Indian pharmaceutical company engaged in developing, manufacturing and globally marketing a broad range of pharmaceutical products across several major therapeutic areas.
Company is a research and development(“R&D”) driven company with a differentiated product portfolio that includes orals, injectable and bio therapeutics, which has enabled them to reach a range of target markets across
Company has 13 manufacturing facilities across India. Company’s facilities are capable of producing pharmaceutical and biopharmaceutical products across a wide range of dosage forms, including oral solids, oral liquids, injectable, including liposomal and lyophilized injectable, bio therapeutics and complex APIs, including chiral molecules, iron molecules and cytotoxic products.
Company’s ability to manufacture their own APIs and formulations has allowed them to attain a significant degree of vertical integration, allowing them to source products in a cost-effective manner, ensure quality and security of availability of an essential raw material and protect company’s intellectual property. In particular, company has in-house manufacturing capabilities for most of their specialty products, including complex injectable, iron products, photo-chemistry products, chiral molecules and bio therapeutics.

BUSINESS STRENGTHS

Well-placed to Leverage company’s Position in the Domestic Market : Company has a strong focus in the women’s healthcare market. Company is a market leader in the gynecology therapeutic area in the IPM, where they are ranked 1st and has a 13.53% market share. Company’s strong position in a number of therapeutic areas such as gynecology, cardiovascular, blood-related, pain and analgesics and oncology/anti-neoplastic has been driven by their differentiated product portfolio and first to market product launches. Company’s specialist prescriptions contributed to 70.67% of total prescriptions for MAT February 2024, which was the highest share among the 20 largest pharmaceutical companies in India.

Demonstrated Capabilities of Building Brands :

Company has demonstrated strong capabilities and a proven track record in building brands. Six of company’s brands were ranked among the 300 highest selling brands in the IPM, in terms of Domestic Sales for MAT Financial Year 2024. In addition, 16 of company’s top 20 brands were each ranked among the three highest selling brands in their respective therapeutic areas in the IPM, in terms of Domestic Sales for MAT Financial Year 2024.

Strong R&D Capabilities Driving Differentiated Portfolio of Products :

Company has strong in-house R&D expertise, which has allowed them to develop a differentiated portfolio of pharmaceutical products that gives them a competitive advantage in the markets in which they operate. Company’s R&D efforts are focused towards (i) complex molecules, including highly complex APIs that require multi-step transformation, (ii) differentiated pharmaceutical formulations, in multiple dosage forms and novel drug delivery systems, which are capable of greater efficacy and better patient compliance,(iii) Continuous product and process improvements to achieve better quality and productivity, and (iv) Niche bio therapeutics formulations.

Extensive and Diversified Manufacturing Capacity

Company has 13 manufacturing facilities across the states of Maharashtra, Gujarat, Sikkim and Karnataka and the union territory of Jammu and Kashmir, in India. Company’s facilities are capable of producing pharmaceutical products of a wide range of dosage forms, including oral solids, oral liquids, injectables, including complex injectables such as liposomal and lyophilized injectables, biotherapeutics and complex APIs, including chiral molecules, iron molecules and cytotoxic products.

BUSINESS STRATEGY

Increase company’s Market Share in the Domestic Market: Company intends to continue to consolidate their position and increase market share in key and leading therapeutic areas, such as gynecology, cardiovascular, anti-infectives, HIV, blood-related, oncology/anti-neoplastics, hormones and vitamins, minerals and nutrients. Company grow their Covered Markets and launch new products, they expect to have room to grow by strengthening their prescription base.
Pursue Strategic Acquisitions, Partnerships and In-Licensing Arrangements: Company has recently strengthened their presence in the Quebec region of Canada through their acquisition of Mantra in November 2023. Further, on March 13, 2024, company entered into agreements with Sanofi India Limited and Sanofi Healthcare India Private Limited to exclusively distribute and promote their products, which include brands such as Cardace, Clexane, Targocid, Lasix, Lasilactone, Cordarone, Plavix and Synvisc, in India. In addition, company plans to continue to strategically select local partners and/or establish subsidiaries with their own on-the-ground sales force in target markets, which company expect would allow them to quickly and cost-efficiently establish distribution channels for their products.
Continue to Invest in Research & Development and Manufacturing Capabilities to Enhance and Grow company’s Differentiated Product Portfolio: In particular, company expect to benefit from significant growth opportunities, due to limited competition globally, in the development, production and commercialization of novel drug delivery systems and biopharmaceuticals to address life-threatening diseases that exist across various indications. As such, company has made and intend to make investments directed towards (i) developing, and increasing their manufacturing capabilities for, novel drug delivery systems, and (ii) increasing company’s bio therapeutics manufacturing capabilities to facilitate the launch of new bio therapeutics in the global markets.

Therapeutic Areas

In India, company classify their products on the basis of their therapeutic use and, as of March 31, 2024, company were present in a total of 19 therapeutic areas. Company has outgrown the IPM in their Covered Markets for 4 out of 13 of their largest therapeutic areas, in terms of Domestic Sales between MAT Financial

Year 2020 and MAT Financial Year 2024, as demonstrated below. Over the last decade, company has been increasing their focus on chronic therapeutic areas.

RISKS

Any manufacturing or quality control problems may damage company’s reputation, subject them to regulatory action, and expose them to litigation or other liabilities, which could adversely affect their reputation, business, financial condition, and results of operations.
Company failure to comply with applicable quality standards may result in product liability claims, which could adversely affect their business, financial condition, cash flows, and results of operations.
Company’s inability to accurately forecast demand for their products and manage inventory may have an adverse effect on business, financial condition, results of operations, and cash flows.
The company is dependent on third parties to distribute and market its products. If company does not maintain and increase the number of their arrangements for the marketing and distribution of their products, the business, financial condition, and results of operations could be adversely affected.
The availability of counterfeit drugs, such as drugs passed off by others as the company’s products, could adversely affect their goodwill and results of operations.
Company’s inability to attract or retain companies who are looking to them for marketing and licensing in the future could adversely affect their market share. If the covenants in company’s agreements with such companies are onerous or commercially restrictive, company’s results of operations and financial condition could be adversely affected.

Financials & Growth Prospects : The Company’s revenues have grown at a CAGR of 6.6% to ₹6,658 crore in FY23. The net profit declined from ₹702 crore in FY22 to ₹ 562 crore in FY23 and fell further to ₹527 crores in FY24. The Ebitda margin decreased from 23.5% in FY22 to 20.2% in FY23 and stood at 19% in FY24. Emcure has incurred capex of ₹1,148 crore in the past three fiscal years. Investments toward marketing, manufacturing, and R&D capabilities have put pressure on the overall cash flows and return ratios. The finance cost has also steadily risen over the past three years. Repaying a part of this debt should reduce it going ahead.

Disclaimer:

Any information or opinions contained herein have been produced for Reading and educational purpose. Information given in this report is taken from reliable sources (Red Herring Prospectus). But we can’t give assurance of 100 % accuracy of this information. Investment in securities market is subject to market risks. Read all the related documents carefully before investing.

Investing in Public Provident Fund (PPF)? Why you should invest Rs 1.5 lakhs in PPF before 5^th April?

If you are planning to invest a lump sum/monthly investment in your PPF account for tax saving or investment purpose then do it before April 5 to get the maximum amount of interest for your PPF deposits. The interest on the PPF balance is calculated on a monthly basis but the interest is credited to the PPF account only once at the end of the financial year (i.e.) after 31st March. The interest is calculated based on the PPF’s minimum account balance between the fifth (5th) and the end of each month.

So if you invest after the 5th of a month, then you only get interest on the previous month’s balance. But if you invest on or before the 5th of the month, then you will get interest on the current month’s balance apart from the previous month’s balance as well. That is the difference between investing before 5th vs after 5th of month in PPF account.

I know the difference may not seem much at first, but remember that PPF maturity is 15 years. So due to compounding over the long-term, you may end up with a little less money at the end of the 15-year tenure.