Encube Ethicals IPO

Strengths · 7

• 01Revenue from operations grew from Rs 1,085.90 crore in FY2024 to Rs 1,848.70 crore in FY2026, a CAGR of 30.48%.
• 02Global Generics revenue rose from Rs 351.30 crore in FY2024 to Rs 861.70 crore in FY2026, and its share of revenue went from 32.36% to 46.61%.
• 03EBITDA margin moved from 27.41% in FY2024 to 35.88% in FY2026, and PAT margin from 14.38% to 23.62%.
• 04Operating cash flow was Rs 303.10 crore in FY2026 against PAT of Rs 436.70 crore, and total borrowings were Rs 221.70 crore against net worth of Rs 1,953.60 crore.
• 05The company had 57 cumulative USFDA ANDA approvals and 73 ANDAs filed as of FY2026, with 51 commercialised.
• 06Global CDMO served over 160 pharmaceutical companies across 50 countries, with over 550 stock keeping units.
• 07Return on capital employed was 32.30% and return on equity 25.65% in FY2026, up from 18.47% and 13.41% in FY2024.

Risks · 10

• 01The Goa facility gave 85.12% of FY2026 revenue from operations, so a disruption there would hit most of the business.
• 02The top five customers gave 42.83% of FY2026 revenue and the top ten gave 59.74%.
• 03The United States gave 64.70% of FY2026 revenue from operations, so changes in US pricing or regulation matter a lot.
• 04The whole offer is an offer for sale of up to Rs 3,000 crore. The company receives no money from it.
• 05Frontier Investment Holdings Pte. Ltd. is selling up to Rs 1,000 crore of shares at a weighted average cost of Rs 199.31 per share, and the promoter at Rs 0.08 per share.
• 06Net working capital days were 143 in FY2026, so a large amount of money stays locked in inventory and receivables.
• 07Research and development cost 7.44% of FY2026 revenue and 11.05% of FY2024 revenue, and may not lead to marketable products.
• 08There are 37 tax proceedings against the company involving Rs 1,131 million, as well as one material civil litigation.
• 09The auditors have noted observations on the audit trail feature in the accounting software and on matters under the Companies (Auditor's Report) Order, 2020.
• 10Top ten suppliers gave 35.40% of purchases of raw and packaging materials in FY2026.

Encube Ethicals Limited is a Mumbai-based pharmaceutical formulations company founded in 1995. It focuses on technically complex topical and transdermal dosage forms such as creams, ointments, topical hormones and patches. It served 50 countries as of 31 March 2026, including the United States, the UK and Europe, and India.

The business runs in three verticals. Global Generics sells the company's own generic topical products through its own front-end in regulated markets. It gave 46.61% of FY2026 revenue from operations. As of 31 March 2026 the company had commercialised 51 ANDAs, and had 43 ANDAs and 25 dossiers in the UK and Germany in the pipeline.

Global CDMO develops and manufactures topical products for other pharmaceutical companies. It served over 160 companies in 50 countries as of 31 March 2026, with over 550 stock keeping units, and gave 42.34% of FY2026 revenue. India Branded Formulations runs the consumer healthcare franchise under the Soframycin brand, with line extensions such as powders and sprays. It gave 8.97% of FY2026 revenue.

In FY2026 the United States gave 64.70% of revenue from operations, Europe 5.62% and India 23.92%. The company operates two manufacturing facilities, in Goa and Indore, and a research unit called Encube Advanced Research Centre in Palava, Mumbai. The Goa facility gave 85.12% of FY2026 revenue. R&D spending was 7.44% of FY2026 revenue, and 228 employees worked in R&D.

The promoter is Mehul Madhusudan Shah, the Chairman and Managing Director, who has over 39 years of experience in the pharmaceutical sector and has been on the Board since the company was incorporated on 7 September 1995.

The industry

The F&S report puts the global topical molecule pharmaceutical market at USD 59 billion in Fiscal 2026, up from USD 43 billion in Fiscal 2021, and projects USD 86 billion by Fiscal 2031F, a 7.20% CAGR. Generic products were USD 46 billion of it, or 77.99%. The global topical molecule CDMO market was USD 5 billion in Fiscal 2026 and is expected to reach USD 8 billion by Fiscal 2031F. The Indian topical molecule market was Rs 145 billion in Fiscal 2026 and is projected to reach Rs 224 billion by Fiscal 2031F, a 9.15% CAGR.

Customer concentration: Top 5 customers gave 42.83% of FY2026 revenue (42.58% in FY2025), and the top 10 gave 59.74%.