Introduction

In recent news, it has been reported that Pharmeasy, a leading online pharmacy in India, is looking to retire its substantial debt of ₹2,400 crores. The debt was obtained from Goldman Sachs last year, and now Pharmeasy faces the decision of either selling some of its successful businesses or seeking funding from investors. UnlistedZone, a trusted source of analysis on unlisted stocks, provides a closer look at this development and its implications.

Retirement Options and Founders' Stance:

Pharmeasy has two primary options for retiring its debt. The first option is to sell some of its thriving businesses, including Mahaveer Medicos, Ascent Welness, and Thyrocare, which are engaged in the wholesale distribution of medicines and diagnostic services. The second option, which the founders prefer, is to raise funds from investors rather than parting with any of their businesses.

Investment Proposal and Valuation:

According to recent reports, Manipal Group, along with existing investors such as TPG and Temasek Holdings, is considering investing ₹1,000 crores in Pharmeasy. The deal is rumored to be structured around a valuation of approximately ₹5,000 crores, marking an 85% decrease from the previous valuation of ₹34,000 crores during the pre-IPO funding round in 2021. It is worth noting that in the unlisted market, Pharmeasy's share price had surged to ₹140 in anticipation of the IPO. However, global inflation and a slowdown in startup funding have led to a correction in valuations across the industry.

Standalone Financial Performance:

While the financials of Pharmeasy's holding company, API Holdings, indicate significant losses in the past, there are positive signs of improvement. In the previous fiscal year (FY22), API Holdings at Standalone level reported a revenue of ₹346 crores and a loss of ₹700 crores. However, in the first eleven months of the current fiscal year (FY23), the company witnessed a revenue increase to ₹423 crores, accompanied by a narrowed loss of ₹150 crores. This improved performance suggests a positive trajectory for Pharmeasy, which may bolster investor confidence.

Survival Prospects and Shareholder Outlook:

If Pharmeasy can secure funding at a lower valuation and continue to narrow its losses, it stands a chance of surviving and potentially regaining shareholder trust. The proposed right issue, aimed at allowing existing shareholders to participate in the funding round, further highlights the company's commitment to its investors. However, it is essential to note that the information provided in this article is based on media reports, and official confirmation from the company's promoters is pending. Until such confirmation is received, it is prudent to consider these details as speculative.

Conclusion:

Pharmeasy's pursuit of debt retirement and funding options is a crucial development in the company's journey. As the company weighs the decision to sell its successful businesses or raise funds from investors, the support from Manipal Group, TPG, and Temasek Holdings offers a glimmer of hope. Despite the substantial decline in valuation, Pharmeasy's narrowed losses and improved revenue demonstrate signs of progress. UnlistedZone will continue to monitor these developments closely and provide further analysis as more information becomes available.

Disclaimer: The views expressed in this article are based on the information available at the time of writing and are subject to change as more updates are released. This article is for informational purposes only and should not be considered as financial advice. Please conduct thorough research and consult with a professional financial advisor before making any investment decisions.

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