|Issue Opens on||Dec 13, 2021|
|Issue Close on||Dec 15, 2021|
|Total IPO size (cr)||1,398.30|
|Fresh issue (cr)||600.00|
|Offer For Sale (cr)||798.30|
|Price Band (INR)||780-796|
|Face Value (INR)||2|
|Listing On||NSE, BSE|
|Objects of the issue
⮚ For funding working capital requirement of the subsidiary.
⮚ For general corporate purposes.
|Issue Break-up (%)|
|Retail Portion||⮚ 35|
|Shareholding (No. of Shares)|
|Finalisation of Basis of Allotment||20-12-2021|
|Refunds/Unblocking ASBA Fund||21-12-2021|
|Credit of equity shares to DP A/c||22-12-2021|
Incorporated in 2006, Medplus Health Services is India’s second-largest pharmacy retailer in terms of the number of stores and revenue.
The company offers pharmaceutical and wellness products i.e. medicines, vitamins, medical devices, test kits, and fast-moving consumer goods i.e. home and personal care products, baby care products, sanitisers, soaps, and detergents, etc.
It is also the first pharmacy retailer in India to offer an omnichannel platform wherein customers can purchase products through stores, place orders over the telephone, online orders, and a Click and Pick facility.
⮚ According to the Technopak Report, it is India’s first pharmaceutical retailer to offer an omnichannel platform. This approach aims to broaden and expand the Company’s client base while also enhancing “convenience” as a primary customer value proposition and retaining customers inside its ecosystem.
⮚ As of September 30, 2021, we operated 546 stores in Karnataka, 475 stores in Tamil Nadu, 474 stores in Telangana, 297 stores in Andhra Pradesh, 224 stores in West Bengal, 221 stores in Maharashtra and 89 stores in Odisha.
⮚ The company has an established track record of delivering strong financial performance. Between the financial year 2019 and financial year 2021, total revenue from operations grew at a compound annual growth rate (“CAGR”) of 16.21% from ₹22,727.37 million to ₹30,692.69 million.
⮚ The company’s business operations across the entire value chain are backward integrated and are wholly managed and operated by itself. The company’s operations are supported by its technology-driven supply chain and distribution infrastructure, which is arranged in a hub-and-spoke model and gives it a strong foundation and substantial power to continue to grow.
Outlook & Valuation:
Over the period of FY19 to FY21, company revenue increased from Rs 2,284.94 crore to Rs 3,090.81 crore, while profits grew from Rs 11.92 crore in FY19 to Rs 63.11 crore in FY21 with only a slight dip in FY20.
Margins of the company are increasing slowly.
The company is the second-largest pharmacy retailer in India which offers an omnichannel platform. After a dismal performance for FY20, the company posted super earnings recently.
The company has low margins, but it is expanding. We believe that there are growth opportunities in the industry and might perform better over the period. There are no listed peers and IPO is arriving at a PE of 71x to its annualized FY22 earnings.
Prima-facie the valuation looks expensive but over the period of time, we believe the company’s growth may justify its valuation.
MEDPLUS HEALTH SERVICES LIMITED
KEY MANAGERIAL PERSONNEL
⮚ Ganga Madhukar Reddy is the Managing Director and Chief Executive Officer of the Company. He is one of the Promoters of the Company and has been a Director of the Company since its incorporation on November 30, 2006. He holds a bachelor’s degree in medicine and surgery and a master’s degree in business administration.
⮚ Cherukupalli Bhaskar Reddy is the Chief Operating Officer – outlet operations of the company. He joined the company on March 1, 2007. He has over 14 years of experience in the pharmaceutical industry.
⮚ Surendranath Mantena is the Chief Operating Officer – MedPlus Mart of the company. He joined the company on October 1, 2010.
⮚ Hemanth Kundavaram is the CFO of the company. He joined the company on January 2, 2021. He has over 15 years of experience in corporate finance and accounting in various industries.
⮚ Parag Jain is the company secretary and compliance officer of the company. He joined the company on March 10, 2014. He has 14 years of experience as a company secretary.
⮚ Atul Gupta is the Non-Executive Director of the company. He has over 13 years of experience in the investment industry.
⮚ Murali Sivaraman is the Non-Executive Independent Director of the company. He was previously associated with Philips Lighting.
⮚ India’s Second Largest Pharmacy retailer Company.
⮚ Strong brand name and customer value proposition.
⮚ Successful Track Record of Expansion Using a Distinct Cluster-based and Replicable Store Unit Expansion Approach
⮚ High-Density Store Network Enhancing Omni-channel Proposition
⮚ Lean Cost Structure and Technology-Driven Operations
⮚ Well Qualified, Experienced and Entrepreneurial Board and Senior Management Team
⮚ Strong promoter background and an experienced and entrepreneurial management team
⮚ Strengthen the Market Position by Increasing Store Penetration in Existing Clusters and Developing New Cluster
⮚ Further Develop the Omni-channel Platform with a Hyper-local Delivery Model
⮚ Increase the Share of Private Labels and Enhance the Stock Keeping Unit (“SKU”) Mix
⮚ Continue to Increase Operating Efficiency and Enhance Supply Chain Management to Drive Profitability
⮚ Enhance Revenue and Increase Customer Wallet Share.
⮚ Changes in prescription medicine prices and commercial terms may have a negative impact on their business.
⮚ Their company, subsidiaries, promoters, and directors are involved in ongoing legal procedures. ⮚ Privacy and security rules govern the use and sharing of personally sensitive information, especially personal health information.
⮚ Their financial success may be harmed if they will not effectively manage inventory and forecast demand.
⮚ Any negative news or occurrence related to the Indian pharma industry may have a negative impact on their business.
MEDPLUS HEALTH SERVICES LIMITED
COMPARISON WITH LISTED INDUSTRY PEERS
There are no listed companies in India that engage in a business similar to that of the Company. Accordingly, it is not possible to provide an industry comparison in relation to the Company
FINANCIALS (RESTATED CONSOLIDATED)
|Particulars (Rs. In Millions) FY 2021 FY 2020 FY 2019|
|Equity Share Capital 4.48 1.94 1.94|
|Other Equity 7,301.05 5,276.08 2,911.43|
|Net Worth 7,305.53 5,278.02 2,913.37|
|Total Borrowings 1,352.35 1,050.51 1,044.02|
|Revenue from Operations 30,692.69 28,706.03 22,727.37|
|EBITDA 2,382.13 1,509.62 1,313.47|
|Profit Before Tax 950.98 293.59 227.51|
|Net Profit for the year 631.11 17.94 119.22|