Emcure Pharma IPO - Subscribe For Long Term: Motilal Oswal

Motilal Oswal Report

Emcure Pharmaceuticals Ltd. launched its initial public offering today and the offer will close for subscription on July 05. The pharma company has fixed the price band in the range of Rs 960-Rs 1008.

Issue size: The Rs 1,952 crore IPO consists of fresh issue of Rs 800 crore and offer for sale of Rs 1,150 crore by promoters and investor selling shareholder. The proceeds from the fresh issue will be used for repayment of debt.

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Emcure with leading position in the domestic therapeutic area, plans to increase its market share in both India and globally by focusing on its key brands, launching new differentiated products, increased focus on hospitals/pharmacy chains and persuing organic/inorganic growth.

The IPO is reasonably priced at 36.1 times FY24 P/E (on diluted basis). We believe commencement of new capacities and potential debt reduction post-IPO would aid recovery in profitability. Recommend Subscribe for Long Term.

Risk and Concerns

• The company is subject to government regulations in India and in international markets.

• Any slowdown or shutdown in manufacturing or R&D operations could adversely affect the business.

• The company is dependent on third parties for the distribution and marketing of the products.

• Any disruptions to the supply, or increases in the pricing, of the raw materials may adversely affect the business, cash flows, and financial condition of the company.

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