Medplus Health is the second largest pharmacy retailer in India and has an omnichannel platform. He will sell his shares in the range of Rs 780-796 per share.
The drugstore retailer will issue new shares worth Rs 600, while shareholders and promoters will offload shares worth Rs 798.30 crore. Investors can bid on a minimum of 18 shares and then on multiples of 18. The issue can be subscribed until Wednesday, December 15.
Despite aggressive pricing, the company has largely received a positive response from brokerage houses, thanks to its higher expansion plans and higher growth prospects.
Medplus, with its clustered in-store presence, was well suited to leverage an omnichannel platform with a hyperlocal delivery model, ICICIDirect said. “In the upper price bracket, it is valued at around 43.9x EV / EBITDA and around 3.1x EV / sales for FY 21. We assign a subscription rating given its unique model and valuation. decent, ”he added.
The company is primarily a physical retail pharmacy with a relatively smaller omnichannel presence.
“The company has a very strong asset turnover with a view to further improving its profitability and therefore the IPO valuation seems cheaper compared to its peers,” said KR Choksey, who recommended subscribing to the IPO.
Established in 2006, Medplus offers a wide range of products, which includes pharmaceutical and wellness products and rapidly evolving consumer goods such as home and personal care products.
At the issue price, MedPlus would trade at 3.1x FY21 P / S & 40x FY21 EV / EBITDA, said Aditya Birla Capital, who suggested high-risk investors subscribe to the issue. “With the opportunities in the MedPlus vertical markets and the gradual shift from the unorganized to the organized sector, we believe that in the short term, MedPlus would be valued more on its long-term growth potential and less on its current finances”, he added.
The retail drugstore chain raised Rs 418 crore from key investors by allocating them 52.51 lakh equity shares at Rs 796 each, for a total of Rs 417.98 crore, according to an ESB circular. Abu Dhabi Investment Authority, BlackRock Global Funds, Fidelity, Nomura, Goldman Sachs, Morgan Stanley, HDFC Life Insurance, ICICI Prudential Life Insurance, SBI Life, SBI Mutual Funds and Aditya Birla Sun Life MF are among the key investors.
Brokerage firm Prabhudas Lilladher gave the question a subscription note as they said Medplus would gain in scale and profitability due to a faster pace of store expansion, the benefits of economic scale and a faster break-even point. “We believe Medplus will trade at a higher multiple because it is a pure-play omnichannel company, with a scarcity premium and high growth rates,” he added. “Medplus EBITDA increased 48% CAGR in fiscal year 19-22. ”
The company has reserved shares worth Rs 5 crore for eligible employees with a discount of Rs 78 each from the final offering price. It has reserved 50 percent of the net issuance for qualified institutional bidders, while HNI investors will get 15 percent. The remaining 35 percent allocation has been set for retail bidders.
The IPO is valued at an EV / EBITDA of 27.5 times and the sale price 2.5 times in the upper IPO price range, Broking said. He suggested subscribing to the show as the company’s omnichannel platform would contribute to strong growth.
Pharmacy retail is the fastest growing segment in the overall retail space with an expected growth rate of 25% CAGR in fiscal year 20-25, according to a Technopak report, which is positive for players like MedPlus.
In the upper price range, the stock is valued at a price / sell of 3.09x, on post-issue equity and FY21 financial data.
During FY21 MedPlus had a 22% market share and observed a 16% CAGR in FY19-21 and a gross margin of 21% and 21.3% in FY21 and H1FY22, said BP Equities. “The company has strong financial performance and plans to further strengthen its position in the market by increasing store penetration in existing clusters and developing new clusters,” he added, with a subscription note to long term.
The proceeds from the new issue will be used by the Company for the working capital needs of the significant subsidiary Optival Health Solutions.
After a dismal performance for FY20, the company recently posted good earnings, Swastika Investmart said in its pre-IPO note. There are growth opportunities in the industry and the company could perform better over a period, he said.
“At first glance, the valuation looks expensive but over the period of time we believe the growth of the company may justify its valuation,” he added, with an IPO underwriting rating for the quotation gain and long term.
MedPlus reported a profit of Rs 63.11 crore for FY21, down from just Rs 1.79 crore for FY20. Revenue during the period increased to Rs 3,069.26 crore, from Rs 2 870.6 crores from Rs.
For the period ending September 30, 2021, the company reported total revenue of Rs 1,890.9 crore with net profit of Rs 66.36 crore.
Dalal & Broacha Stock Broking also recommended subscribing to the show, given its attractive price.
Religare Broking said, “The company has a large scale of operations and offers competitive prices to its customers, which will continue to gain market share. From a financial standpoint, the company’s performance appears to be correct. The company plans to strengthen its reach in the market by entering new geographies, he added, giving a positive view of the matter.