Emcure Pharmaceuticals Limited is an Indian pharmaceutical company engaged in developing, manufacturing and globally marketing a broad range of pharmaceutical products across several major therapeutic areas. They are a research and development ('R&D') driven company with a differentiated product portfolio that includes orals, injectables and biotherapeutics, which has enabled them to reach a range of target markets across over 70 countries, with a strong presence in India, Europe and Canada. They were ranked as (i) the 13th largest pharmaceutical company in India in terms of Domestic Sales for MAT Financial Year 2024, (ii) the 4th largest pharmaceutical company by market share in the Covered Markets in terms of Domestic Sales for MAT Financial Year 2024, and (iii) the largest pharmaceutical company in the gynecology and human immunodeficiency virus ('HIV') antivirals therapeutic areas in India in terms of Domestic Sales for MAT Financial Year 2024. Company's sales in India contributed to 48.28% of the total revenue from operations for the Financial Year 2024. Between MAT Financial Year 2020 and MAT Financial Year 2024, the Domestic Sales grew at a CAGR of 9.73%. They had a Covered Market presence of 52.66% of the IPM in terms of Domestic Sales for MAT Financial Year 2024. The competitive advantage in the domestic market stems from the differentiated product portfolio, which has allowed them to establish the presence in most of the major therapeutic areas, including gynecology, cardiovascular, vitamins, minerals and nutrients, HIV antivirals, blood-related and oncology/anti-neoplastics. Across the gynecology, vitamins, minerals and nutrients, HIV antivirals, blood-related and oncology/anti-neoplastics therapeutic areas, they were ranked among the 10 largest pharmaceutical companies in India in terms of Domestic Sales for MAT Financial Year 2024. They are an R&D driven company and the core strength lies in the ability to research, develop and manufacture in-house specialty pharmaceutical products for high-growth therapeutic areas, for which there is limited competition and high barriers to entry. As of March 31, 2024, they had a team of 548 qualified scientists and five dedicated R&D facilities in India. As of March 31, 2024, they had filed over 1,800 dossiers globally including 209 in the European Union and 142 in Canada. In addition, as of March 31, 2024, they had been granted 220 patents and had 30 pending patent applications in several countries, and had submitted 102 drug master files ('DMFs') for APIs with the U.S. Food and Drug Administration ('USFDA'). Company has 13 manufacturing facilities across the states of Maharashtra, Gujarat, Sikkim and Karnataka and the union territory of Jammu and Kashmir, in India, 11 of which are situated on leasehold land. The facilities are capable of producing pharmaceutical and biopharmaceutical products across a wide range of dosage forms, including oral solids, oral liquids, injectables, including liposomal and lyophilized injectables, biotherapeutics and complex APIs, including chiral molecules, iron molecules and cytotoxic products. In particular, they have in-house manufacturing capabilities for most of the specialty products, including complex injectables, iron products, photo-chemistry products, chiral molecules and biotherapeutics. The flagship brand, Officer's Choice Whisky was launched in 1988 with the entry into the mass premium whisky segment. Officer's Choice Whisky has been among the top selling whisky brands globally in terms of annual sales volumes between 2016 and 2019. Over the years, they have expanded and introduced products across various categories and segments. As of December 31, 2023, the product portfolio comprised 16 major brands of IMFL across whisky, brandy, rum and vodka. Certain of the brands, such as, Officer's Choice Whisky, Sterling Reserve, Officer's Choice Blue and ICONiQ Whisky, are 'Millionaire Brands' or brands that have sold over a million 9-litre cases in one year. As of March 31, 2024, the marketing and distribution network in India was supported by a field force of over 5,000 personnel who interact regularly with doctors and other healthcare providers to promote the pharmaceutical products. As of March 31, 2024, the distribution network had over 5,000 stockists, catered by 37 carry-and-forward agents. The strength in marketing and distribution has been acknowledged and leveraged by several multi-national pharmaceutical companies that they have entered into agreements with for the marketing and in-licensing of their products in India and overseas. On March 13, 2024, they 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. As per financial performance, Emcure Pharmaceuticals Limited has posted total income / net profits of Rs 5,918.86 Cr / Rs 702.55 Cr (FY22), Rs 6,031.71 Cr / 561.84 Cr (FY23) and Rs 6,715.24 Cr / Rs 527.57 Cr (FY24). So as per previous financials data, company has shown good results. Company has an average EPS of Rs 29.68 and average RoNW of 16.87% for last three fiscals. Issue is priced at a P/BV of 6.18 as per NAV of Rs 163.22/- as on 31.03.24. If we attribute latest earnings of FY22, FY23, and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 27.13, 33.92, and 36.13 respectively, which looks fully priced. As per RHP, comparison between listed peers is given in above table. On BRLM's front, four lead managers are associated with this IPO, and have handled around 71 IPOs in last three fiscals. Kotak Mahindra Capital Company Limited: This is 24th main board IPO from this BRLM. From last 10 IPOs, all opened above issue price on the day of listing. As of now, from last 10 IPOs, all are trading above issue price. (As on 28.06.2024) Axis Capital Limited: This is 35th main board IPO from this BRLM. From last 10 IPOs, three opened below issue price and remaining opened above issue price or at par on the day of listing. As of now, from last 10 IPOs, one is trading below issue price and remaining are trading above issue price. (As on 28.06.2024) Jefferies India Private Limited: This is 7th main board IPO from this BRLM. From last 6 IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing. As of now, from last 6 IPOs, one is trading below issue price and remaining are trading above issue price. (As on 28.06.2024) J. P. Morgan India Private Limited: This is 9th main board IPO from this BRLM. From last 8 IPOs, two opened below issue price and remaining opened above issue price or at par on the day of listing. As of now, from last 8 IPOs, one is trading below issue price and remaining are trading above issue price. (As on 28.06.2024) As per financials, Emcure Pharmaceuticals Limited has shown good results, RoNW is 16.87% and P/E is respectively 27.13, 33.92, and 36.13 as per FY22, FY23, and FY24 earnings. So, issue looks fully priced. Company is in business of pharmaceutical, which is highly competitive and fragmented business segmented. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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