Emcure Pharma closes 3% higher after making strong market debut; should you buy the stock now?

Emcure Pharmaceuticals, backed by Namita Thapar, made a remarkable debut on the Indian stock exchanges on Wednesday, July 10. The shares were listed at ₹1,325.05 apiece on the BSE, reflecting a 31.45 percent premium over the issue price of ₹1,008. Following the listing, Emcure Pharma's shares climbed further to ₹1,384, marking a 4.5 percent increase from the listing price and a 37.3 percent rise from the IPO price.

The stock finally settled at ₹1,361.00, up 2.71 percent from the listing price.

Emcure Pharmaceuticals' strong market debut follows an exceptional response to its IPO, which was subscribed 67.87 times overall. The retail category saw a subscription rate of 7.36 times, while the Qualified Institutional Buyers (QIB) category experienced an astounding 191.24 times subscription. Additionally, the Non-Institutional Investors (NII) category was subscribed 49.32 times.

Going ahead, Shivani Nyati, Head of Wealth, Swastika Investmart, recommends investors to hold their positions in the stock by keeping a stop loss at ₹1,200.

"Emcure Pharmaceuticals, a leading player in the Indian pharma market, witnessed a strong debut on the stock exchanges, listing at Rs. 1325 per share. This translates to a significant 31.45% gain over its issue price of Rs. 1008. The listing aligns with pre-listing expectations, fueled by the robust investor response.

The oversubscription and listing gain highlight investor confidence in Emcure's established brand, diversified product portfolio, and international market reach. However, the pharmaceutical industry's regulatory stringency and potential disruptions in the raw material supply chain still require ongoing monitoring.

Emcure Pharma's listing performance is positive, which aligns with pre-listing anticipation. The strong investor response and listing gain demonstrate confidence in the company's future potential. However, the identified risks within the pharmaceutical industry necessitate ongoing monitoring by investors," Nyati explained.

Emcure Pharmaceuticals, a Pune-based business, conducts research, develops, produces, and markets pharmaceutical products worldwide across many therapeutic areas.

The ₹1,952 crore IPO was open for bidding between July 3 and July 5 with a price band in the range of ₹960 to ₹1,008. The issue was a combination of a fresh issue of 0.79 crore shares aggregating to ₹800.00 crore and an offer for sale of 1.14 crore shares aggregating to ₹1,152.03 crore.

Prominent selling shareholders in the OFS included promoters Satish Ramanlal Mehta, Sunil Rajanikant Mehta, Namita Vikas Thapar, and Samit Satish Mehta. Additionally, BC Investments IV, Pushpa Rajnikant Mehta, Bhavana Satish Mehta, Kamini Sunil Mehta, Arunkumar Purshotamlal Khanna, Berjis Minoo Desai, and Sonali Sanjay Mehta participated in the share sale.

The company intends to use the net proceeds to finance the following goals: general corporate objectives; repayment and/or payback of all or a portion of certain outstanding borrowings obtained by the organisation.

For the Emcure Pharma IPO, Axis Capital Limited, J.P. Morgan India Private Limited, Jefferies India Private Limited, and Kotak Mahindra Capital Company Limited were the book-running lead managers. Link Intime India Private Ltd. was the offering's registrar.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.