Nov 05 2023, 09:13
PharmEasy CEO on 90% drop in share price: 'a chance to reward shareholders':
Pharmeasy's INR 3,500 crore-rights issue has been "oversubscribed", CEO Siddharth Shah says. Shah also talks about the company's focus on repaying lenders, growth outlook, market share etc.
PharmEasy still being among the leaders in the e-pharmacy segment. Even the sum of parts of its parent company API holdings, which also includes listed player Thyrocare, is more than the current valuation of around USD500 million-USD600 million that the company will get with this round. At its peak, PharmEasy was valued at USD5.6 billion in 2021.
PharmEasy CEO Siddharth Shah, said the rights issue was "oversubscribed" and that Manipal Group's Ranjan Pai has also subscribed. He adds that the reconciliation process of the rights issue is ongoing and that investments will be subject to CCI approval.
Shah also speaks about the rationale behind this move and whether it is the right prescription for the company.
He said,the rights issue has been done at INR4.84 per share, and PharmEasy was at INR53.64 per share at its peak valuation. This comes just after the company also hit Ebitda profitability earlier this year. Can you explain what happened? Why did the company, you, and the board, agree to raise money at this price?
Now is a chance for us to allow people to average down because if somebody has invested at INR20 or INR30 or INR50 per share, this effectively allows you to average down to almost half the cost. If I bought something at INR50 and now, I buy at INR5, my average is INR25-INR27. This is basically an opportunity to reward shareholders.
Without going into the details of the various proposals and the board deliberations, I would like to say that a couple of principles were very clear. One was that whatever we did was supposed to be a rights issue, only because we first wanted existing shareholders to reap its benefits. Second, we are now Ebitda positive,so we thought we should raise enough money to become completely debt-free.
PharmEasy: Consolidated pro-forma earnings
FY21
FY22
Revenue
4,319
6,384
Cost of purchase of stock in trade
3.664
529
5%
920
5,586
Employee costs
1,499
5%
Contribution margin before sales and marketing spend
1,567
Other expenses
5,759
9,193
Total expenses
1,548
4,043
Net loss
Figures in INR crore unless specified.
Nov 05 2023, 11:37