IPO Note : Rubicon Research Ltd Choice Broking Ltd
Salient features of the IPO:
* Rubicon Research Ltd. (RRL) incorporated in 1999, it is a pharmaceutical formulations company, driven by innovation through focused R&D, with an increasing portfolio of specialty products and drug-device combination products targeting regulated markets and in particular the United States.
* The issue is a combination of fresh issue (Rs. 500cr) & OFS (Rs. 877.499cr). The company will not receive any proceeds of the OFS. From the fresh issue net proceeds, the company will be utilizing Rs. 310cr for prepayment or scheduled repayment of all or a portion of certain outstanding borrowings availed by the company. Residual proceeds will be used for general corporate purposes.
Key competitive strengths:
* The fastest growing Indian pharmaceutical company amongst its peers and the only Indian company focused completely on the US market.
* Data-driven product selection framework has allowed it to build a product portfolio with a combination of new and specialty products allowing it to withstand pricing pressures.
* R&D capabilities and continuing investment allows it to pursue complex products that offer strong revenue opportunities.
* Robust sales and distribution capabilities in the US.
* Strong track record of compliance combined with expertise in cost effective manufacturing.
* Experienced and entrepreneurial management team with a proven track record and marquee private equity investor.
Business strategy:
* Grow its portfolio of specialty products and drug-device combinations.
* Continue to develop new products and build leadership positions in regulated markets for generic products.
* Expand US market presence and leverage its intellectual property and product portfolio in other key regulated markets.
* Pursue synergistic business development and external innovation opportunities
Risk and concerns:
* High revenue dependence on the U.S. Market poses risk from adverse regulatory or trade developments
* High customer concentration
* Regulatory / manufacturing compliance risk
* Uncertainty in R&D and approvals
* Foreign exchange exposure
* Competition
Valuation Overview and IPO Rating:
Rubicon Research Ltd. a pharmaceutical formulations company, has demonstrated impressive growth, with revenue from operations more than tripling between FY23 and FY25. This growth is underpinned by a robust, multi-disciplinary, and data-driven product selection framework focused on sustainable new product development. The company’s strategic expansion into specialty products and diversified dosage forms - oral liquids, nasal, and ophthalmic supported by upgraded manufacturing facilities and new approvals, has significantly broadened its market presence. Additionally, Rubicon’s efforts to leverage its US regulatory approvals to enter other similarly regulated markets such as the UK, Canada, Australia, and South Africa further enhance its growth prospects. Valued at a premium with a P/E of 52.5x (TTM EPS Rs. 9.2) and an EV/Sales ratio of 6.1x, RRL trades at a higher multiple compared to its industry peers. However, its strong brand equity, and expanding portfolio in high-growth B2B segments justify this valuation. Given its consistent performance, strategic initiatives, and favorable industry tailwinds, RRL is well-positioned for long-term value creation. We therefore recommend a “Subscribe for long term” rating.
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
