New Delhi: Despite getting the regulatory approval to launch its initial primary offering (IPO), API Holdings, the parent company of PharmEasy, is feeling the heat of a recent meltdown in the unlisted market.
Shares of PharmEasy have eroded half of investors wealth in the pre-IPO market dropping down to Rs 70-75 on Tuesday. It was trading at Rs 135-140 almost a quarter ago. During its worst trade, the scrip had tanked to Rs 65, dealers said.
The Mumbai-based med-tech player received the green signal from capital market’s watchdog Sebi to float its
Rs 6,250 crore-primary stake sale. Existing shareholders aren’t planning to sell shares.
Dealers active in the unlisted space are skeptical of the issue that is likely to hit Dalal Street anytime, considering the latest volatility in the secondary market and severe selling in the latest debutants.
Sandip Ginodia, CEO, Altius Investech said that new rules for HNI investors and anchor investors will weigh over sentiments.
PharmEasy was last valued at $5.6 billion and was aiming at an IPO valuation of around $7-8 billion. It closed a $350-million pre-IPO funding round in October, taking its total fundraising in 2021 to nearly $1 billion.
Ginodia expects that the company will float its IPO at the similar valuations following the weak fundamentals, muted numbers and high supply of the unlisted shares.
According to the new rules, one third of the HNI portion will be reserved for the bidders between Rs 2-10 lakh bidding, whereas the remaining two third part will be allocated for bidding worth Rs 10 lakh or more.
Also, anchor investors will have a new lock-in for up to 90 days for the half of their allocation, whereas half of their portion will have a lock-in of 30 days, as earlier.
Dinesh Gupta, co-founder, UnlistedZone said that following the bloodbath in unicorn counters and new rules, lofty valuations will become history for the time being, particularly for the loss making or cash buring players.
“Based on the current circumstance, the issue is likely to be priced in the range of Rs 60-65,” he added. A lot of investors have burnt their hands, falling prey to IPO euphoria, buying shares at pricey valuations in the unlisted space.
API Holdings has received the nod from Sebi when all the listed new age and internet based unicorns have witnessed a sharp of up to 65 per cent from the peaks.
Companies including Paytm, Nykaa, CarTrade, Zomato and PolicyBazaar are hitting new lows, thanks to the intense market selloff and high valuations commanded by these companies.
On the contrary, Hitesh Dhankani, co-founder, Analah Capital is bullish on the counter. He said that Rs 65-70 is a decent entry level in the counter and it’s a good story, thanks to its market leadership.
In FY20, PharmEasy doubled its revenue to Rs 637 crore, said an Analah Capital’s Report. “It is a cash flow generating player which makes it different from other unicorns”, Dhakani added.
According to a recent report from Bernstein Research, PharmEasy has half the share in online pharmacy gross merchandise value, compared with 16 per cent for Tata-owned 1mg and 15per cent for Reliance Industries’ Netmeds.
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