What you must know about the Remus Pharmaceuticals IPO

Remus Pharmaceuticals Ltd, is an SME IPO on the NSE which is opening for subscription on 17th May 2023. Remus Pharmaceuticals Ltd was incorporated in the year 2015 and the company is principally engaged in the marketing and distributing of finished formulations of pharmaceutical drugs. Broadly, the product offerings of the company can be stacked into 2 distinct categories i.e., APIs and FPFs. Let us look at in detail.

• Active pharmaceutical ingredients (APIs) are a major contributor to the business of Remus Pharmaceuticals. It is the biologically active component of a drug product (tablet, capsule, cream, injectable) that produces the intended effects. They are inputs that go into generic drugs.

• The second category is the Finished Pharmaceutical Formulations (FPFs). These are the therapeutic drugs available in different dosage forms. The extent of value addition is higher in FPF as compared to APIs.

Remus Pharmaceuticals has a massive product portfolio of 429 products, and it operates under different brand names across the world. The company also has 295 products registered in a total of 13 countries with another 134 products currently at different stages of the process of registration in 16 countries. Remus caters to the B2C and also to the B2B market. For its B2B business, Remus Pharmaceuticals had business-to-business supply agreements with 58 domestic distributors and 139 international distributors. In terms of the spread of its clients, its clients are spread across more than 20 countries. The client profile of Remus Pharmaceuticals includes Generic distributors, regional distributors, multinational distributors to Hospitals and Clinics.

Key terms of the SME IPO of Remus Pharmaceuticals Ltd

Here are some of the highlights of the Remus Pharma India IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 17th May 2023 and closes for subscription on 19th May 2023; both days inclusive.
   

• The company has a face value of Rs10 per share and the issue price for the fresh issue portion has been fixed in the range of Rs1,150 to Rs1,229 per share.
   

• The company will issue a total of 3.88 lakh shares in the price range of Rs1,150 to Rs1229. At the upper end of the band, the issue price works out to Rs1,229 per share aggregating to a total fund raising of Rs47.69 crore.
   

• The company has allocated 50% of the issue size for the QIB investors, 15% allocation to HNIs / NIIs and the balance 35% for the retail investors.
   

• The minimum lot size for the IPO investment will be 100 shares. Thus, retail investors can invest a minimum of Rs122,900 (100 x Rs1,229 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO.
   

• HNI / NII investors can invest a minimum of 2 lots comprising of 200 shares and having a minimum lot value of Rs245,800. There is no upper limit on what the HNI / NII investors can apply for and there are no limits applicable for the QIB investors.
   

• Like every SME IPO, this issue also has a marketing making portion with a market maker portion allocation of 19,500 shares. Sunflower Broking will act as the market maker to the issue providing two-way quotes to ensure liquidity on the counter.
   

• The company has been promoted by Arpit Shah, Roma Shah, Swapnil Shah and Anar Shah and the promoter stake in the company stands currently at 92.82%. Post the IPO, being a fresh issue of shares, the promoter stake will be get diluted proportionately.

While Beeline Capital Advisors Private Ltd will also be the lead manager to the issue, Link In-time India Private Limited will be the registrar to the issue.

Key dates to be aware of in the Remus Pharmaceuticals Ltd IPO (SME)

The SME IPO of Remus Pharmaceuticals Ltd IPO opens on Wednesday, May 17th, 2023 and closes on Friday May 19th, 2023. The Remus Pharmaceuticals Ltd IPO bid date is from May 17th, 2023 10.00 AM to May 19th, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is the 19h of May 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account.

Financial highlights of Remus Pharmaceuticals Ltd

The table below captures the key financials of Remus Pharmaceuticals Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The profit margins have been fairly strong and the sales growth has been quite erratic. However, the company has an established model with a matured market. However, investors must remember that this is a traditionally low margin business. That could be an overhang on valuations. Overall, the company has niche strengths which it can leverage. This is a high risk stock which can be added to the portfolio with a very longer term perspective. There could be hiccups on the stock in the short run.