A caution for Pharmeasy investors

Word of Caution for Pharmeasy Investors - 

​Pharmeasy has come to PreIPO market in the first week of November. Pharmeasy has raised funds at ₹54/share in July,2021 and ₹68/share on 20th oct,2021. In Oct, company has seen valuation of ₹5.8 billion $ in PreIPO round. 

At present, share is trading anywhere between ₹105 - ₹130 which is 1.5x - 2.0x of last month valuations. 

DRHP of company is filed on 11th Nov,2021 giving us insights about the company. Let's analyze it briefly - 

Issue Size - ₹6,250 cr

New Issue Size -  ₹4,688 cr

Offer for Sale - ₹1,599 cr

PreIPO Placement on 18th Nov - 2,635 cr

New Issue Size -  ₹2,053 cr

Offer for Sale - ₹1,599 cr

Total Issue Size Left for Subscription - ₹3,652 cr

As per Livemint, company is going for IPO at 9 Billion $ Valuation which is equivalent to ₹68,000 cr 

Standalone results as per March FY21 

Total Revenue from Operations => ₹2,335.27 cr

Total Loss => ₹641.3 cr

Cashflow from Operations => - 552.3 cr

This means on every 1 cr sale of medicine, company incur a loss of 27.46 Lacs. 

Consolidated Results (including all subsidiaries) as per March,2021

Total Revenue => ₹4,363.2 cr 

Total Consolidated Loss (including all subsidiaries) => ₹1,548.5 cr

Total Debt on 30th June,2021 => ₹2,772.61 cr

This means on every 1 cr sale of medicine, lab tests (including all subsidiaries), company incur a loss of 35.49 Lacs. 

Chasing loss making companies at such steep valuations can't be justified by any means. This is becoming a norm now when all affluent investors are trying to dump the shares to Retail investors at crazy valuations. 

We have always ask investors to exit stocks in 2 conditions - Once when company fails to grow and second when the valuations is extremely high (10 Rs. thing getting sold at 30 - 35 Rs). Pharmeasy for us comes in latter category. 

Please be cautious while investing in Pharmeasy stocks.