Basic Details

API holding, the parent company of Pharmeasy, is going to conduct the rights issue to raise funds and strengthen the valuation of the company amid weak market conditions.

1. As per the letter of offer, the size of the right issue is Rs. 750 crore at the price of Rs. 100 per right issue.

2. The entitlement ratio is 1:82, which means for 1 CCPS, a shareholder must have 82 equity shares as on the record date 9.09.2022.

3. The opening date of the rights issue is Sep 21, 2022, and will remain open till Oct 20, 2022 (5 p.m.). Previously the company had plans to raise Rs. 6250 crore money through IPO but due to weak market conditions, the company delayed the IPO. Rights issue is an offer to existing shareholders to purchase the shares of the company. It is one of the prevalent ways for a company to raise capital. In this type of offer, existing shareholders are preferred. If existing shareholders are not willing to purchase then the company goes to the public.     

Why Pharmeasy is coming with the Right Issue?

The major objective of the right issue is to increase the firm's valuation, which may help the company achieve a greater valuation at the time of its IPO next year. In the past year, the company's valuation has decreased by roughly half. Currently, the unlisted share price of Pharmeasy is approximately Rs. 40 on the grey market. If it does not increase, it could present complications for the future IPO of the company. Conducting the right issue at Rs. 100 per share will provide the company with a psychological benefit by developing a favourable opinion regarding the company's worth.

Should You Apply in Pharmeasy coming with the Right Issue?

As per our analysis investors should avoid this right issue. Generally, any right issue comes up with a discounted price which is not applied in the case of Pharmeasy. In the grey market, the unlisted shares price of Pharmeasy are being traded at around Rs. 40 while the right issue is priced at Rs. 100 per equity share which is far cheaper. So why one would invest at such a higher price? Pharmeasy is a startup incorporated in 2015. It is India's fastest-growing online pharmacy which aims to deliver everything related to healthcare along with diagnostic services and doctor-on-call services. The company was founded by Dharmil Seth and Dhawal Shah. The company has achieved many milestones. It has acquired one of its rivals Medlife, It has further acquired cloud-based hospital supply chain management startup Aknamed and one listed company Thyrocare and many more. The company is the largest online pharmacy in India serving 1000+ cities.