The Indian pharmaceutical sector continues to witness growing investor interest, particularly within the SME and mid-cap segments. Amid this momentum, Accretion Pharmaceuticals Limited has launched its IPO on 14th May 2025. The IPO, which is a book-building issue, has attracted attention from market participants due to its significant GMP movement, promising financial growth, and emerging fundamentals.
This article provides a comprehensive 2000-word analysis of the Accretion Pharmaceuticals IPO, covering the IPO structure, grey market premium (GMP) trends, company fundamentals, technical indicators, and analyst recommendations.
Company Overview: Accretion Pharmaceuticals Limited
Accretion Pharmaceuticals Limited operates within the pharmaceutical sector and specializes in the development, production, and sale of generic and branded formulations. Over the past few years, the company has shown strategic focus on research-based production and targeted therapeutic segments. It has leveraged efficient manufacturing practices and supply chain strategies to increase product availability and visibility in competitive markets.
In FY2023-24, Accretion Pharmaceuticals demonstrated a revenue jump from ₹29.53 crore to ₹33.94 crore, showing a YoY growth of 14.93%. The most significant transformation came in its profitability, with PAT soaring from ₹0.10 crore to ₹3.88 crore—an astounding increase of 3,780%, suggesting a turnaround in the company’s operational efficiency.
Accretion Pharmaceuticals IPO Details
| Particulars | Details |
|---|---|
| IPO Open Date | 14th May 2025 |
| IPO Close Date | 16th May 2025 |
| Allotment Finalization Date | 19th May 2025 |
| Refund Initiation | 20th May 2025 |
| Listing Date | 21st May 2025 |
| Issue Type | Book Building |
| Face Value | ₹10 per share |
| Price Band | ₹96 to ₹101 per share |
| Lot Size | 1,200 shares |
| Total Issue Size | ₹29.75 crore |
| Shares on Offer | 29.46 lakh shares |
| Listing Exchange | NSE SME |
| Market Maker Quota | 1.47 lakh shares |
| Registrar | Kfin Technologies Limited |
Grey Market Premium (GMP) Trends
Grey Market Premium (GMP) refers to the premium at which the IPO shares are being traded in the unofficial market before the official listing. GMP offers an informal indication of investor sentiment and expected listing gains.
| Date | IPO Price | GMP | Estimated Listing Price | Estimated Listing Gains |
|---|---|---|---|---|
| 14-May-2025 | ₹101 | ₹8 | ₹109 | 7.92% |
| 13-May-2025 | ₹101 | ₹8 | ₹109 | 7.92% |
| 12-May-2025 | ₹101 | ₹0 | ₹101 | 0.00% |
| 11-May-2025 | ₹101 | ₹0 | ₹101 | 0.00% |
| 10-May-2025 | ₹101 | ₹0 | ₹101 | 0.00% |
The GMP rose to ₹8 only days before the IPO opened, indicating a recent build-up in interest. Despite remaining at ₹0 for over a month, the sudden jump hints at positive sentiment driven by improved market visibility, analyst coverage, and investor engagement.
IPO Objectives
The company plans to deploy the proceeds from the IPO towards the following purposes:
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Capital Expenditure on Machinery and Equipment: To expand production capacity and automate operational processes for scalability.
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Repayment of Existing Borrowings: To strengthen the balance sheet and reduce interest obligations.
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Working Capital Requirements: To fund inventory, accounts receivables, and other short-term obligations.
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General Corporate Purposes: Including administrative expansion, marketing, and technology enhancement.
This multifaceted deployment strategy indicates that the company intends to strengthen both operational and financial capabilities post-listing.
Financial Performance Snapshot
Revenue and Profitability
| Metric | FY2022-23 | FY2023-24 | Growth (%) |
|---|---|---|---|
| Revenue from Operations | ₹29.53 Cr | ₹33.94 Cr | +14.93% |
| Profit After Tax (PAT) | ₹0.10 Cr | ₹3.88 Cr | +3,780.00% |
| PAT Margin | 0.34% | 11.51% | Strong expansion |
The company’s net profit margin has shown remarkable growth, backed by improved revenue quality and operational discipline. A PAT margin of 11.51% reflects the company’s ability to convert sales into profits at a substantial rate.
Technical and Valuation Metrics
| Key Financial Ratios | Pre-IPO | Post-IPO |
|---|---|---|
| PE Ratio | 21.29 | 16.08 |
| EPS (₹) | 4.74 | 6.28 |
| Return on Net Worth | 72.47% | – |
| ROCE | 36.73% | – |
| Market Cap | ₹112.27 crore | – |
A PE ratio of 21.29 appears fairly priced compared to other SME pharma peers. With an EPS expected to improve post-IPO to 6.28, the valuation remains attractive from a growth investor’s perspective. Additionally, high RoNW and ROCE reflect capital efficiency and strong profitability metrics.
SWOT Analysis
Strengths:
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Strong revenue and profit growth in the last fiscal year.
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High return ratios and healthy profit margins.
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Lean cost structure and efficient asset utilization.
Weaknesses:
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Highly competitive pharmaceutical industry with pricing pressure.
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Limited market share and brand recognition.
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Reliance on SME platform may restrict investor access and liquidity.
Opportunities:
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Strong demand for affordable healthcare and pharmaceuticals in Tier-II/III cities.
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Opportunity to enter export markets and high-margin therapeutic areas.
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Scope for innovation in drug formulations and generics.
Threats:
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Regulatory scrutiny in the pharmaceutical sector.
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Currency fluctuations affecting imported raw material costs.
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Any adverse shift in healthcare policy or drug pricing norms.
Industry Outlook
India’s pharmaceutical industry is projected to grow at a CAGR of 10-12% over the next five years. With increasing healthcare expenditure, generic drug exports, and government schemes such as PLI (Production Linked Incentives), mid-size players such as Accretion Pharmaceuticals have a strong opportunity to scale up.
SME pharma companies are also increasingly attracting investor interest due to their agility in R&D, low debt, and potential for merger/acquisition exits. However, competition remains stiff, and operational consistency will be critical.
Investor Sentiment and Analyst Reviews
Analyst sentiment towards Accretion Pharmaceuticals remains mixed. While the company has delivered an impressive profit jump, the IPO has received mostly neutral ratings due to concerns over size, SME platform listing, and short listing gains.
Key Observations:
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Short-Term View: Mild GMP indicates low listing pop; short-term traders might be cautious.
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Medium-Term View: GMP growth is a recent trend, so further subscription data will offer better insight.
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Long-Term View: Financial turnaround and improving margins make it a reasonable candidate for patient investors.
Subscription Strategy for Investors
Retail Investors
With a minimum investment size of ₹1,21,200 per lot (1,200 shares), this IPO might be inaccessible to many retail investors. However, those with risk appetite and an eye on long-term value may consider subscribing.
HNI and Institutional Investors
For HNIs and institutional participants, the low post-IPO PE and robust returns on equity offer attractive entry points. However, SME segment risks—particularly lower liquidity—must be factored into portfolio decisions.
Final Verdict
The Accretion Pharmaceuticals IPO presents a balanced opportunity. While it does not promise a blockbuster listing based on current GMP (₹8 per share), it offers credible long-term prospects based on financial growth, reasonable valuation, and industry potential.
Investors must weigh:
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Strength of recent earnings turnaround.
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Modest GMP indicating fair interest, not frenzy.
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High RoNW and profitability as long-term positives.
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SME exchange constraints on liquidity and visibility.
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