Rubicon Research: Can Rubicon Research sustain its impressive growth while facing US market risks? – News Air Insight

ET Intelligence Group: Rubicon Research, a pharmaceutical formulations company, plans to raise ₹500 crore through a fresh issue to repay debt and to fund acquisitions. It will also raise ₹877.5 crore through an offer for sale. The promoter stake will fall to 62% after the IPO from 78%. General Atlantic Singapore, the majority shareholder will reduce its stake to 35.8% from 52.2%. The company has reported strong revenue and profit growth between FY23 and FY25 along with margin expansion. Its return on net worth (RoNW) at 29% is higher than 12-18% for peers. Also, R&D expenditure relative to revenue was 10.4% compared with 2-8% for peers. However, nearly 98% of the revenue comes from the US and 71% from the top five customers reflecting a high concentration and elevated exposure to the US tariffs related concern. Given these factors, investors with high-risk appetite may consider it for long-term.

Business

Incorporated in 1999, Rubicon is engaged in development, manufacturing, and commercialisation of pharma formulations. As of June 2025, it had a portfolio of 72 active abbreviated new drug applications (ANDAs) and nine active NDAs approved across multiple therapies by the US FDA. The company has 17 new products awaiting USFDA approval and 63 products at various stages of development. According to Frost & Sullivan (India), Rubicon’s three branded products-Equetro, Raldesy, and Lopressor OS do not have any therapeutic equivalent as of July 15, 2025.

Directly or through third-party distribution partners, Rubicon has registered or filed 48 product applications across Australia, the United Kingdom, Singapore, Saudi Arabia, and the United Arab Emirates. The company also provides contract manufacturing services to select customers in India, Australia, and New Zealand. It has three manufacturing sites in India and two USFDA inspected R&D facilities across India and Canada.

Financials
The company’s revenue grew annually by 75.9% to ₹1,296.2 crore between FY23 and FY25. The operating margin before depreciation and amortisation (Ebitda margin) nearly doubled to 20.7% in FY25 from 10.5% in FY23. It reported net profit of Rs134.4 crore in FY25 compared with net loss of ₹16.9 crore in FY23. In the June 2025 quarter, revenue and net profit increased by 11% and 69% to ₹356.9 crore and ₹43.3 crore, respectively.

Valuation
The company demands a price-earnings multiple of 60, significantly higher than 21-31 for peers including Strides Pharma Science and Alembic Pharmaceuticals. A higher premium reflects the company’s growth prospects backed by a strong product lineup.