Medicap Healthcare Limited IPO

01At a glance

What the company does: makes pharmaceutical packaging, closures including Euro Head caps, and bottle preforms, at a 6,732 sq. m. facility in Manjusar, Vadodara, Gujarat (DRHP p.27, DRHP p.31). Euro Head caps were 85.84% of FY25 revenue (DRHP p.31).

Who pays it: pharmaceutical and healthcare companies; the top ten customers were 77.12% of FY25 revenue, and exports 19.98% (DRHP p.31, DRHP p.48).

Why it is raising money: ₹743.70 million for plant and machinery at the existing unit, ₹528.00 million for the subsidiary KASR Healthcare to repay debt, ₹329.00 million to repay the company's own debt, and the rest for general purposes (DRHP p.27, DRHP p.28).

How fast it has grown: revenue from ₹716 million in FY23 to ₹1,021 million in FY24 and ₹1,083 million in FY25 (DRHP p.29).

The one thing to understand: a profitable single-product business now funding a new, related venture. In December 2024 the company bought 51% of KASR Healthcare, which is building an IV-fluid and bottle plant, from two promoters and one other holder at ₹10 a share, and now proposes to put ₹528 million of offer money into KASR to repay its debt (DRHP p.28, DRHP p.197, DRHP p.217).

02The business, in plain words

A pharma-packaging maker makes caps, closures and bottle preforms and sells them to drug makers in India and abroad.

A drug maker needs caps for its bottles → it orders Euro Head caps from Medicap → Medicap makes them in Vadodara and ships them → the drug maker pays on agreed terms.

Caps-and-closures capacity was 82% used in FY25 (DRHP p.43).

Earnings equation: Profit ≈ caps sold × (price − raw-material and packing cost) − overheads − interest. Gross margin was 44.61% and EBITDA margin 34.31% in FY25 (DRHP p.107).

03Where the money comes from

Source: DRHP p.31, DRHP p.43, DRHP p.48.

04The growth record

Source: DRHP p.29, DRHP p.107, DRHP p.345.

ROCE was 17.67% in FY25 (DRHP p.107). Other income was ₹16.04 million in FY25, against profit before tax of ₹353.33 million (DRHP p.70). There are no contingent liabilities as at 31 March 2025 (DRHP p.32).

05What the growth is made of

Caps volume in FY24, slower in FY25. Revenue grew 43% in FY24 and 6% in FY25, while exports fell from ₹264.40 million to ₹216.37 million in FY25 (our arithmetic, DRHP p.48). Production of bottle preforms and miscellaneous products fell in FY25 (DRHP p.43).

06Earnings quality

Operating cash flow of ₹590.02 million over FY23 to FY25 compares with profit of ₹653.01 million (our arithmetic, DRHP p.29, DRHP p.345). Investing outflows jumped to ₹963.82 million in FY25, from ₹43.81 million in FY24, funded mostly by ₹782.00 million of financing inflows (DRHP p.345). Core net working capital was 137 days in FY25 (DRHP p.107).

07The balance sheet

Source: DRHP p.29, DRHP p.30, DRHP p.107.

08What the money is for

Source: DRHP p.27, DRHP p.28.

09Who is selling

Nobody. The issue is a fresh issue only, of up to ₹2,400 million (DRHP p.27).

10Promoters

The promoters are Kamalkumar Aggarwal, Rajveer Kamal Aggarwal and Minal Aggarwal (DRHP p.27). Kamalkumar Aggarwal and Rajveer Aggarwal each sold 25% of KASR Healthcare to the company in December 2024 at ₹10 a share (DRHP p.217). No proceedings are listed against the company, promoters, directors or subsidiary (DRHP p.30, DRHP p.31). Remuneration to Rajveer Kamal Aggarwal and Minal Aggarwal was ₹18.31 million in FY25, and the related-party table shows none for FY23 (DRHP p.32).

11Who already owns it

Source: DRHP p.28. The last row is our arithmetic.

12What changed just before the IPO

• KASR Healthcare: 51% acquired from promoters in December 2024 (DRHP p.217).
• Borrowings: up from ₹69.78 million to ₹880.90 million in FY25 (DRHP p.30).
• Share capital: up from ₹49 million to ₹245 million in FY25 (DRHP p.29).
• Bonus issue: 4 shares for every 1 held, allotted on 24 July 2024 (DRHP p.83).
• Public company: the partnership firm was converted into a public limited company, with a certificate of incorporation dated 2 June 2017 (DRHP p.83).
• Auditor: there was no change in the statutory auditors in the three years before the filing (DRHP p.75).

13Capacity and expansion

Caps and closures capacity rose from 298 to 389 units, as the document counts them, between FY23 and FY25, and was 82% used; bottle-preform capacity was 27% used (DRHP p.43). The proceeds fund new machinery, and KASR is setting up an IV-fluid plant with its own bottles (DRHP p.27, DRHP p.197).

14Market size and industry structure

The F&S report cited in the offer document values the global pharma-packaging market at USD 37.5 billion in 2024 and projects USD 51.4 billion by 2029 (DRHP p.27). Those projections are F&S's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• A prominent Euro Head cap maker, citing F&S (DRHP p.27).
• High margins: 34.31% EBITDA margin against 19.89% at EPL (DRHP p.107, DRHP p.109).

Against that: one product, concentrated customers and suppliers, one plant, and regulatory requirements in pharma packaging (DRHP p.31, DRHP p.40).

16Peers the company named

Source: DRHP p.106. The peers' average P/E is 20.03 (DRHP p.105).

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

17Risks, in plain words

• One product. Euro Head caps were 86% of FY25 revenue (DRHP p.31).
• Customers. Ten customers were 77% (DRHP p.31).
• Suppliers. Ten suppliers were 88% of purchases (DRHP p.40).
• One plant. The Vadodara unit is critical (DRHP p.31).
• New venture. KASR's IV-fluid plant is still being built (DRHP p.197).

18Litigation and regulatory matters

None. The document lists no outstanding proceedings by or against the company, subsidiary, group company, promoters, directors or key managers (DRHP p.30, DRHP p.31).

19Related-party transactions

The KASR purchase from promoters is the main related-party transaction read for this study (DRHP p.217).

20What the offer document does not say

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

• Who owns the other 49% of KASR Healthcare, in the pages read.
• How much KASR has borrowed and spent on its plant, in the pages read.
• What the capacity "units" measure, in the pages read.
• Who the top customers are, in the pages read.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Who owns the rest of KASR, and why should offer money repay a 51%-owned subsidiary's debt?
2. When will KASR's IV-fluid plant start, and what will it cost in total?
3. Why did exports fall in FY25?
4. Why are bottle-preform lines only 27% used?
5. Will KASR compete with Medicap's own IV-fluid customers?

1Sources and cited facts

This study was read from 1 document the company filed. The 50 figures it cites are listed under the document each came from, with the page and the sentence as printed.