Rubicon Research
IPO Size: Rs. 1,377 cr
- Fresh Issue of Rs. 500 cr to repay Rs. 310 cr of Rs. 380 cr net debt and balance for unidentified acquisition / general corporate purpose
- Offer for Sale (OFS) of Rs. 877 cr by PE General Atlantic classified as promoter (50% stake to drop to 36% post IPO, part-exiting at 32% IRR in 6.5 years)
Price band: Rs. 461-485 per share
- General Atlantic sold 2.25% stake on 6-7 Oct 2025, at Rs. 484.47 for Rs. 169 cr
M cap: Rs. 7,990 cr, implying 17% dilution
- 75% for institutions and only 10% for retail, as company reported loss for FY23 and FY22
IPO Date: Thu 9th Oct to Mon 13th Oct 2025, Listing Thu 16th Oct 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Pharma Formulation Maker for Regulated Markets
Rubicon Research is an innovation-driven specialty formulations pharmaceutical company, selling non-branded products and drug-device combination (such as nasal spray) in US. Company is R&D focussed, investing 10%+ topline annually on research, having 1 centre each in India and Canada. None of its 2 manufacturing facilities in India has received ‘Official Action Indicated’ status from US FDA since commencement of operations in 2013.
Analgesics or pain management accounts for 25% revenue, with central nervous system (CNS) and cardiovascular (CVS) 20% each.
Growing Topline
Revenue increased at 60% CAGR between FY22-25, to Rs. 1,284 cr, with FY25 revenue up 50% YoY. Dependence on top 10 products is down from 93% of revenue in FY22 to 68% in Q1FY26. Revenue for Q1FY26 stood at Rs. 352 cr, which is more than FY22 topline of Rs. 314 cr.
High Margin Business
Due to innovative and specialized products, gross margin is as high as 71%, with 21% EBITDA and 12% PAT margin. FY25 PAT rose 48% YoY to Rs. 134 cr, with Q1FY26 PAT up 69% YoY to Rs. 43 cr. On an equity of Rs. 154 cr (FV Re 1 each), EPS is at Rs. 2.8 and Rs. 8.7 for Q1FY26 and FY25 respectively.
While debtor days at 2.7 months are ok given export focus, inventory holding period of nearly 5 months is on the higher side. Yet RoE is at over 29%.
Healthy Growth Visibility
Of the 70 commercialized products, 16 products have 0 or maximum 1 competition. Growth outlook is extremely encouraging for the company:
- As of 30.6.25, 17 new products await US FDA ANDA approval and 63 product candidates are in various stages of development. Company’s historic commercialization rate is 86%.
- On 15th Aug 25, it has received 1 ANDA approval for 2 nasal sprays under FDA review. Rubicon is one of the only 28 countries globally to have secured US FDA nasal spray approval.
- On June 23, 2025, company acquired a plant at Pithampur, Madhya Pradesh, to manufacture steroids, hormones, high-potency products such as immunosuppressants and oncology medications, which will increase installed capacity by 17%, although current capacity itself is under-utilised.
Priced for Growth
M cap of Rs. 7,990 cr, leads to a PE multiple of 39x on FY26E EPS of Rs. 12.5 per share, which is likely to witness margin expansion through debt repayment and new launches. The pricing may appear steep for the size of operations, but company states US tariffs to have negligible impact with specialized product basket, expected strong topline growth, double-digit net margin making it a unique proposition.
Company has Rs. 26 cr capital work in progress as of 30.6.25, on Rs. 350 cr net fixed assets ensuring investment in future growth.
10th Oct 2025 at 08:13 pm