IPO-Bound PharmEasy’s Unlisted Share Prices Fall 15% In A Week

The unlisted share prices of API Holdings, which owns Pharmeasy have declined in the range of 12.6%-15% in the past one week post the weak listing of fintech giant Paytm and overall volatility in the stock markets.

On Friday, unlisted shares of the healthtech unicorn were at INR 118-INR 119 per share, compared to INR 135-INR 140 a week ago.

The shares had started to trade in the unlisted market around Diwali around INR 108- INR 110.

“The weak response to the Paytm IPO and listing and the broader market correction have impacted the PharmEasy shares,” said Manan Doshi, cofounder of Unlisted Arena.

The discount listing of Paytm and eventual slump of nearly 37% in the first two trading days subdued the market sentiments for startup IPOs and their shares. Its shares, however, have recovered since then.

Further, both domestic and global stock markets too have been highly volatile off late amid concerns of a new mutant variant of Novel Coronavirus, originated in South Africa.

Amid a global frenzy, the Sensex today (November 26th, 2021) closed at 57,107.15, lower by 1,687.94 points or 2.87% from its previous close.

Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services Ltd said, “Domestic market opened gap down and witnessed sharp correction of 3% after new highly mutated Covid-19 variant brought forward uncertainty over growth prospects.”

The domestic market has corrected 9% from its peak as weak global cues, persistent selling by foreign institutional investors (FII) and premium valuations have made investors cautious, he added.

Speaking on the projection for PharmEasy’s unlisted shares, Doshi of Unlisted Arena said that outlook is positive. “The company is not merely a medicine selling platform and as it has acquired Thyrocare, it would foray into other segments including insurance.”

He further said that the proposed IPO consists of only fresh issues and no existing investor would be offloading their shares boosting the confidence of retail investors.

Earlier this month, API Holdings filed its draft red herring prospectus (DRHP) for raising INR 6,250 Cr through IPO.

Prosus (Naspers) is the largest shareholder of the Mumbai-based startup with a 12.04% stake through Naspers Ventures BV. The Dutch multinational conglomerate is the international Internet assets division of South African multinational Naspers. Singapore based investment major Temasek holds a 10.84% stake in the company through Macritchie Investments Pte. Ltd.

PharmEasy plans to use about 31% of the IPO proceeds towards settling part of debt. 

The healthtech unicorn said that out of the total IPO proceeds of INR 6,250, it will utilise INR 1,920 Cr towards “prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company and certain of its subsidiaries.”

Out of the sanctioned credit of INR 2,629.6 Cr, the company has an outstanding debt of INR 2,494.7 Cr as of September 15.

The epharmacy platform posted a loss of INR 313.8 Cr during the April-June quarter. 

Founded in 2015 by Dharmil Sheth and Dr Dhaval Shah, PharmEasy merged with its investor entity, Ascent Health, to form API Holdings in 2019. It brought in three new cofounders – Siddharth Shah, Hardik Dedhia, and Harsh Parekh.