Zota Health Care stock in focus after company to raise ₹400 Cr via QIP

Synopsis: Zota Health Care launched a QIP on December 16, 2025, to raise Rs. 400 crore (Rs. 500 crore with greenshoe) to fund working capital, retail expansion, and general corporate purposes, involving equity dilution.

This is a pharmaceutical company engaged in manufacturing, marketing, and exporting pharmaceutical, ayurvedic, nutraceutical, and OTC products across Asian, African, Russian, and Latin American markets is now in the focus after raising QIP of Rs. 400 cr

With a market capitalisation of Rs. 5,128 cr, the shares of Zota Health Care Ltd are currently trading at Rs. 1,660 per share, down from its previous close of Rs. 1,687 per share.

About the QIP

Zota Health Care is a prominent player in the pharmaceutical and healthcare sector, initiated a Qualified Institutional Placement (QIP) on December 16, 2025, aiming to mobilise up to Rs. 400 crore through the issuance of equity shares exclusively to qualified institutional buyers. 

This fundraising mechanism includes a flexible green shoe option that could add another Rs. 100 crore, bringing the total potential raise to Rs. 500 crore, depending on market demand and oversubscription. The announcement triggered significant volatility in the company’s stock price during trading sessions that day, as investors reacted to the dilution prospects and strategic capital infusion plans.

Detailed QIP Framework

The QIP’s base component is structured to garner Rs. 400 crore, with the greenshoe provision allowing an additional 25% expansion if strong investor interest materialises. This overall structure may result in substantial equity dilution for existing shareholders, potentially reaching up to 8.4% of the company’s total post-issue paid-up capital, specifically, around 6.3% attributable to the base issue and an extra 2.1% from the greenshoe exercise.

Such dilutions are common in QIPs to fund growth initiatives while providing liquidity to institutions like mutual funds, insurance companies, and foreign portfolio investors.

The floor price for the QIP has been fixed at Rs. 1,615.28 per equity share, which represents a modest 4.2% discount compared to the company’s closing price on the previous trading day, Monday. However, the indicative issue price is anticipated to be approximately Rs. 1,535 per share, translating to a deeper discount of about 9% from the prior close.

This pricing strategy is designed to make the offer attractive in a competitive market, ensuring quick subscription while balancing the interests of current shareholders.

Planned Utilisation of Proceeds

The raised capital will be strategically deployed across multiple avenues to bolster operational and expansion capabilities. Key uses include augmenting working capital requirements for day-to-day operations, making strategic investments in Davaindia Health Mart Ltd, which is a subsidiary focused on retail pharmacy to establish additional company-owned, company-operated (COCO) stores, and allocating funds toward general corporate purposes such as debt repayment or other growth-oriented expenditures. This move underscores Zota’s commitment to scaling its retail footprint in the competitive Indian healthcare distribution landscape.

To promote post-issue price stability and prevent immediate selling pressure, a mandatory 90-day lock-up period has been imposed on the shares allotted under the QIP, applicable to both the company and its promoters. This lock-in clause aligns with standard SEBI regulations for QIPs, fostering investor confidence by curtailing short-term supply overhangs and allowing the market to absorb the fresh equity gradually.

About the company 

Zota Health Care Ltd is an Indian pharmaceutical company focused on marketing and distribution of generic medicines, speciality products, and healthcare solutions. It operates a wide portfolio across therapeutic segments such as cardiology, diabetology, anti-infectives, pain management, and dermatology. Zota is also known for its retail pharmacy chain DavaIndia, which promotes affordable generic medicines, aligning with the government’s push for low-cost healthcare access.

The company reported a sharp improvement in topline performance, with sales rising 92% YoY to Rs. 129 crore in Q2FY26 from Rs. 67.3 crore in Q2FY25. EBITDA turned positive at Rs. 6.32 crore, compared to a loss of Rs. 0.87 crore last year. Profitability remains under pressure, with net loss widening YoY to Rs. 16.2 crore, while EPS declined to Rs. -5.20.

Written by Manideep Appana

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