Image Source: PharmaCompass
The Chennai-based active pharmaceutical ingredients (API) manufacturer Malladi Drugs and Pharmaceuticals Limited is gearing up for a significant public market debut with plans for a substantial IPO in the range of Rs 1,000-1,200 crore. Backed by healthcare-focused private equity fund InvAscent, which holds roughly a 22-23% stake, Malladi Drugs has started discussions with investment banks to finalize the IPO strategy. This development signals an important milestone for the company as it seeks to provide liquidity for its investors and promoters while continuing its stronghold in the API segment globally.
Key Takeaways from the IPO Plans
-
Malladi Drugs intends the IPO primarily as an offer-for-sale (OFS), with shares being sold by the private equity investor InvAscent and the company's promoters rather than raising fresh capital.
-
The company's current strong cash position means there is currently no pressing requirement for fresh capital infusion to fund growth.
-
Malladi is globally recognized as the leading manufacturer of key APIs such as ephedrine, pseudoephedrine, and phenylephrine, which are critical for nasal decongestants and cough-and-cold medications.
-
Their products serve difficult-to-replicate supply chains with deep and long-standing customer relationships, insulating them from tariff-related pressures.
-
The majority of their revenue is derived from exports, primarily to markets such as Germany, the US, and Mexico.
Malladi Drugs Business Overview
Established with a strong legacy in pharmaceutical manufacturing, Malladi Drugs specializes in the production of active pharmaceutical ingredients, advanced intermediates, and contrast media agents predominantly for cough and cold, antihistamines, anticonvulsants, and antidepressants segments. In FY25, the company posted consolidated revenue of Rs 626.79 crore, which is marginally down from Rs 673 crore in FY24. Profit also slightly dipped to Rs 64.76 crore from Rs 75.63 crore in the previous fiscal year.
According to a November 2024 report by credit rating agency IndiaRatings, Malladi derived about 90% of its revenue from exports in FY24, with top contributing countries including Germany, the US, and Mexico, which together accounted for 44% of revenues. The company’s EBITDA improved to Rs 160.2 crore in FY24 from Rs 129.1 crore in FY23, with margins increasing from 22% to 25.7%, driven by advanced technology adoption and better realizations in contract manufacturing.
Financial backing and growth trajectory
In March 2022, Malladi raised Rs 250 crore from InvAscent’s healthcare-focused private equity fund, which has been pivotal to the company’s scale-up in manufacturing capacity and pipeline expansion. The proposed IPO provides an exit route for InvAscent as well as liquidity for promoters, reflecting confidence in Malladi’s sustained market leadership in the pharmaceutical ingredients sector.
Current market conditions for IPOs remain positive, with India’s IPO market being the second-largest globally in funds raised. Malladi’s upcoming listing joins a wave of healthcare and pharmaceutical sector IPOs aiming to capitalize on investor demand for robust, export-driven companies with strong global customer bases.
Outlook and Next Steps
Discussions around Malladi Drugs’ IPO are still at an early stage, and final decisions on timing and issue structure may take some time. However, early indications suggest that the company is well-positioned to leverage its industry leadership, operational strength, and export footprint to attract investor interest. Market watchers will be keenly observing this IPO as it shapes up to be a key event in India’s pharma sector listing calendar in the near term.
Source: Moneycontrol
Stay Ahead – Explore Now!
Indian Rupee Dips 0.2% to 88.31 Against US Dollar Amid Global Dollar Strength and Domestic Market Pressure
Advertisement
Advertisement
