After muted activity in the primary market in the first quarter of the calendar year 2023, initial public offerings (IPOs) are likely to regain momentum in the current quarter as macro headwinds are easing up. More than 55 companies have received approval from the markets regulator, Securities and Exchange Board of India (SEBI), to raise funds through initial share sale and they are looking to hit Dalal Street and make a splash on stock exchanges.
Avalon Technologies, an electronic manufacturing services (EMS) company, has already launched its ₹865 crore IPO on April 3, and the list is going to get longer as the month passes. Among others, Mankind Pharma, SignatureGlobal (India), Northern Arc Capital, Tata Technologies, and Penna Cement Industries are expected to launch their public offer in the April-June quarter of the current fiscal.
Mankind Pharma, which manufactures Manforce Condoms and Prega News, is looking to raise around ₹4,200-4,700 crore via IPO route later this month. If succeeded, this would be the biggest IPO in the pharma sector after the ₹6,480 crore public offer by Gland Pharma in November 2020.
The IPO comprises an offer for sale (OFS) of 4 crore equity shares by the company's promoters and existing shareholders. Post share sale, shareholding of promoters will decline to 76.50% from 79% at present. The promoters of the company include Ramesh Juneja, Rajeev Juneja, Sheetal Arora, Ramesh Juneja Family Trust, Rajeev Juneja Family Trust, and Prem Sheetal Family Trust, as per the DRHP (draft red herring prospectus) filed with SEBI. The existing shareholders Cairnhill CIPEF Ltd., Beige Ltd. and Link Investment Trust will also trim their stake in the company.
As the IPO is completely an OFS, the entire proceeds from the issue will be paid to the selling shareholders in proportion to the equity shares offered by them and the company will not receive any proceeds from the scheme.
Incorporated in 1991, Mankind Pharma, the country’s fourth largest pharmaceutical company in terms of domestic sales for the financial year 2022, generates 98% of its revenue from India. The Delhi-based company, which manufactures top-selling condom brand Manforce Condoms, pregnancy test kit Prega News, emergency contraceptive brand Unwanted-72, Gas-O-Fast ayurvedic antacids, and acne-treating medicine AcneStar, is a net debt-free company which generated revenue of ₹50 crore in 2000-01, ₹500 crore in 2006-07, and ₹5,000 crore in 2018-19. For the financial years 2020, 2021 and 2022, the company's revenue from operations in India amounted to ₹5,788.8 crore, ₹6,028 crore and ₹7,594.7 crore, respectively, representing 98.70%, 97.01% and 97.60%, respectively, of its total revenue from operations. After India, its major markets are the US, Bangladesh, Sri Lanka and Nepal.
Mankind, which operates at the intersection of the Indian pharmaceutical formulations and consumer healthcare sectors, is looking to expand the scope of its R&D Centres and initiate several new forays. It spent ₹141.49 crore (FY20), ₹170.78 crore (FY21) and ₹213.44 crore (FY22) on R&D, respectively, representing 2.41%, 2.75% and 2.74%, respectively, of its total revenue from operations for such years. The management estimates that the spending will be around 2.5% in the last fiscal (FY23). It has a team of over 600 scientists (including approximately 40 scientists who hold PhDs) and a dedicated in-house R&D center with three units located in IMT Manesar, Gurugram, Haryana.
