Cotec Healthcare Limited IPO

01At a glance

What the company does: contract development and manufacturing of off-patent medicines, including complex generics and modified-release forms, through formulation, loan licensing and commercial manufacturing, across injectables, tablets, capsules, ointments, eye drops, ampoules, vials, syrups and infusions (DRHP p.28). The F&S report it cites calls it India's second-largest CDMO by number of dosage forms, with 24 formulation types, among peers assessed (DRHP p.28).

Who pays it: pharmaceutical companies and institutional buyers: 154 customers in FY25, with the top ten at 67.34% of revenue; named customers include German Remedies (a Zydus Healthcare subsidiary), Albert David and Bion Therapeutics (DRHP p.37, DRHP p.38).

Why it is raising money: up to ₹2,262.49 million for a new project to expand capacity and make new products, and the rest for general purposes (DRHP p.29).

How fast it has grown: revenue from ₹824 million in FY23 to ₹1,380 million in FY24 and ₹1,922 million in FY25 (DRHP p.30).

The one thing to understand: a small, fast-growing contract maker planning a large leap. The new project, an oral-solids block, an oncology unit, a penicillin range, a small-volume-parenteral block and sterile lines, is due to start production by July 2027 and costs about 3.8 times March 2025 net worth (DRHP p.30, DRHP p.49, our arithmetic).

02The business, in plain words

A pharmaceutical contract manufacturer makes medicines to other companies' orders, under their brands or licences, in its own plant, earning a conversion margin on each batch.

A pharma company wants to launch a generic tablet without building a plant → it contracts Cotec to formulate and manufacture it → Cotec makes the batches at Roorkee to the client's specification → the client markets the medicine and pays Cotec for the supplies.

Earnings equation: Profit ≈ batches made × (price − API, excipient and packing cost) − plant overheads − interest. EBITDA margin was 16.36% in FY25 (DRHP p.122).

03Where the money comes from

Source: DRHP p.37, DRHP p.59.

04The growth record

Source: DRHP p.30, DRHP p.122, DRHP p.335.

Our arithmetic: revenue compounded about 52.7% a year from FY23 to FY25 and profit after tax about 99.4% (DRHP p.30).

05What the growth is made of

Volume across dosage forms. Revenue grew 52.72% a year over two years and EBITDA 81.79% (DRHP p.122). General-tablet capacity was raised from 2,052.50 million to 2,272.50 million units in FY25 and a calcium-tablet line of 818.10 million units was added (DRHP p.59).

06Earnings quality

Operating cash flow of ₹244.70 million over FY23 to FY25 compares with profit of ₹354.92 million (our arithmetic, DRHP p.30, DRHP p.335). In FY25 trade receivables rose by ₹206.48 million and inventory by ₹74.67 million (DRHP p.335). Bank guarantees issued were ₹187.58 million at March 2025 (DRHP p.32).

07The balance sheet

Source: DRHP p.30, DRHP p.122.

08What the money is for

Source: DRHP p.29. Commercial production is estimated to begin by July 2027 (DRHP p.49).

09Who is selling

Source: DRHP p.29. The shares offered are about 5.3% of the company's equity (our arithmetic).

10Promoters

The promoters are Harsh Tiwari and Vandana Tiwari (DRHP p.28). Two criminal proceedings are pending against the promoters and two against directors, with amounts not quantifiable (DRHP p.31). The weighted average cost of shares transacted in the last year was ₹3.42 (DRHP p.34).

11Who already owns it

Source: DRHP p.29. The company had seven shareholders at the DRHP date (DRHP p.30).

12What changed just before the IPO

• Share split and bonus: share counts are adjusted for a sub-division and bonus (DRHP p.30).

• Margins: EBITDA margin up from 12.41% to 16.36% in FY25 (DRHP p.122).

• Capacity: new calcium-tablet line in FY25 (DRHP p.59).

• Public company: converted to a public limited company, with a fresh certificate of incorporation dated 2 July 2025 (DRHP p.360).

• Share split: the paid-up capital was sub-divided from 514,443 shares of ₹10 each to 1,028,886 shares of ₹5 each in 2025 (DRHP p.90).

• Bonus issue: 110 shares for every one held, 113,177,460 shares in all, on 26 August 2025 (DRHP p.90).

• Directors' remuneration: managing director Harsh Tiwari was paid ₹10.25 million in FY23, ₹24.00 million in FY24 and ₹33.00 million in FY25 (DRHP p.304).

• Auditors: no change of auditor in the last three years (DRHP p.83).

13Capacity and expansion

One manufacturing facility at Roorkee, with general tablets at 64.84%, capsules at 65.55% and liquids at 40.58% of capacity in FY25 (DRHP p.59). The new project adds oncology, penicillin, small-volume parenteral and sterile capacity (DRHP p.49).

14Market size and industry structure

The F&S report cited in the offer document projects the Indian pharmaceutical market to grow about 9.5% a year from 2024 to 2029, reaching USD 38.3 billion (DRHP p.28). Those projections are F&S's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• Breadth of dosage forms: 24 types, citing F&S (DRHP p.28).
• Returns: return on net worth of 33.91% in FY25 (DRHP p.122).

Against that: customer concentration, supplier dependence, the execution risk of a large new plant, and one existing facility (DRHP p.37, DRHP p.40, DRHP p.49).

16Peers the company named

Source: DRHP p.124. The peers' P/E ranges from 34.50 to 41.71, average 38.11 (DRHP p.120).

No P/E is possible for the company until a price band is set.

17Risks, in plain words

• New plant. ₹2.26 billion of new capacity to be built (DRHP p.49).
• Customers. Ten customers were 67% of FY25 revenue (DRHP p.37).
• Suppliers. APIs and excipients bought without long-term contracts (DRHP p.40).
• Utilisation. Existing lines well below capacity (DRHP p.59).
• One facility. All current production is at Roorkee (DRHP p.60).

18Litigation and regulatory matters

Source: DRHP p.31.

19Related-party transactions

Not read in detail for this study.

20What the offer document does not say

In the sections read for this study, the document does not give:

• What the criminal proceedings against the company and promoters concern, in the pages read.
• Where the new project will be built, in the pages read.
• How the new capacity will be filled, given current utilisation, in the pages read.
• Who the other top customers are, since consent was not given (DRHP p.38).
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Why build a large new plant when tablet lines ran at 65% in FY25?
2. What are the criminal proceedings against the company and its promoters?
3. Which customers are committed to the oncology and penicillin lines?
4. How will the company fund cost overruns on the project?
5. Why did the number of customers fall from 177 to 154 in FY25?

1Sources and cited facts

This study was read from 1 document the company filed. The 53 figures it cites are listed under the document each came from, with the page and the sentence as printed.