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• PPL is a pharmaceutical company having global operations.
• Though the top line marked growth, the bottom line posted erosion for the last 39 months performance.
• Though RI is at a discount of around 21.6% to its last traded price, it is fully priced based on its loss marking trends.
• Well-informed/cash surplus investors may consider parking funds for long-term rewards.
ABOUT COMPANY:
Piramal Pharma Ltd. (PPL) is a pharmaceutical company with global operations, providing end-to-end pharma services to customers and a portfolio of differentiated pharma products across a domestic and global distribution network. It operates under three business verticals - (i) Piramal Pharma Solutions ("PPS"), an integrated contract development and manufacturing organization ("CDMO"); (ii) Piramal Critical Care ("PCC"), a complex hospital generic ("CHG") business; and (iii) India consumer healthcare ("ICH") business, selling over-the-counter ("OTC") products.
Its CDMO provides integrated drug discovery, development, and manufacturing services for both drug substances i.e. active pharmaceutical ingredients ("APIs") and drug products i.e. formulations across the lifecycle of a molecule from discovery and clinical development to commercial launch. Presently, it has a diverse customer base of over 500 customers comprising global innovator pharma companies, emerging biopharma companies and generic pharma companies. PPL's integrated network of facilities for the CDMO operations is located across India, the UK and North America and it has obtained and maintained requisite approvals from various global regulatory agencies.
PPL's CHG portfolio comprises over 35 hospital-focused products in the areas of inhalation anaesthesia, injectable anaesthesia, pain management, intrathecal therapy and other Injectables. It is the fourth largest company globally as per USD value for a combined market of Sevoflurane, Desflurane, Isoflurane and Halothane (Source: IQVIA MIDAS MAT® Dec 2022)1. It is vertically integrated with inhalation anaesthesia. The company manufactures both API and drug products at the Digwal, India and Bethlehem, US facilities as well as the key starting material at the Dahej, India facility.
The company's ICH business has a diverse portfolio of over 30 OTC products across categories of analgesics, skin care, VMS, kids' wellness, digestives, women's health, and hygiene and protection categories, with well-known brands such as Little's, Lacto Calamine, I-Pill, Polycrol, and Tetmosol. During Financial Year 2023 and 2022, it launched 26 and 40 new products, respectively. It sells products to several stockists that have reached across chemist and cosmetics stores, kids' toys and gift shops, and modern trade stores.
The company also has a JV with Allergan Pharma of Ireland under the name and style" Allergan India". It is a specialty pharmaceutical company and has emerged as one of the market leaders in the ophthalmology therapy area. PPL has 17 development and manufacturing facilities across India, North America and the UK. As of March 31, 2023, it had 6295 employees on its payroll.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 129629630 equity shares of Rs. 10 each with a fixed price of Rs. 81 per share to mobilize Rs. 1050 cr. The company is offering RI in the ratio of 5 shares for every 46 shares held by the eligible stakeholders as of the record date of August 02, 2023. The issue opens for subscription on August 08, 2023, and will close on August 16, 2023. The full amount is to be paid on an application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 24.54 cr. for this RI process and from the net proceeds, it will utilize Rs. 859.24 cr. for repayment/prepayment of certain borrowings, and Rs. 166.22 cr. for general corporate purposes.
ICICI Securities Ltd. is the sole lead manager for this RI and Link Intime India Pvt. Ltd. is the registrar of the issue.
Post-RI, PPL's current paid-up equity capital of Rs. 1193.32 cr. will stand enhanced to Rs. 1322.95 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 10715.88 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, PPL has (on a consolidated basis) posted a turnover/net profit - (loss) of Rs. 6479.01 cr. / Rs. 835.03 cr. (FY21), Rs. 6834.90 cr. / Rs. 375.96 cr. (FY22), and Rs. 7306.66 cr. / Rs. - (186.46) cr. (FY23). Though the company marked growth in its top lines, its bottom line kept declining for the reported periods, in particular, it marked a loss for FY23 and raised eyebrows.
As per filing with the exchanges, for Q1 of FY24, it has marked a loss of Rs. - (98.58) cr. on a turnover of Rs. 1787.16 cr. Thus it continues to post losses despite growth in top lines.
PPL's standalone borrowings stood at Rs. 1627.28 cr., and consolidated borrowing stood at Rs. 5504.76 cr. as of March 31, 2023. As of the said date, its current paid-up equity capital of Rs. 1193.32 cr. was supported by free reserves of Rs. 5580.18 cr.
DIVIDEND POLICY:
The company has paid a dividend of 4.22% (FY22), and 5.65% (FY23). It will continue to follow a prudent dividend policy post-listing of RI, based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 543635 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 106.35 on August 01, 2023, and opened on an ex-right basis at Rs. 103.40 on August 02, 2023. Since then, it has marked a high/low of Rs. 108.15 / Rs. 100.70. The scrip last closed at Rs. 103.10 as of August 04, 2023, and for the last 52 weeks it has posted a high/low of Rs. 197.16 / Rs. 61.68.
The promoters' holding has been constant at 34.79% for the last three quarters ended on June 30, 2023. The counter is well managed above the RI price to attract investors.
Review By Dilip Davda on August 5, 2023
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Piramal Pharma Rights Issue 2023 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Piramal Pharma Rights Issue 2023 worth investing. The Piramal Pharma Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Piramal Pharma Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Piramal Pharma Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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