MedPlus Health IPO Review: MedPlus Health Services Limited Initial Public Offer (IPO) will open for subscription on December 13th, 2021 and close on December 15th, 2021. The company is looking to raise Rs 1,398.30 Crores through the IPO. In this article, we take a closer look at the MedPlus Health Services Limited IPO Review 2021 and its possible future prospects. Keep Reading to find out!
About the Company
MedPlus Health Services Limited was founded in 2006. It is the second-largest pharmacy retailer in India. They have a pharmacy retail network of over 2,000 stores distributed across Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Odisha, West Bengal and Maharashtra. Medplus was the first pharmacy retailer in India to offer an omnichannel platform.
The company has a data analytics-driven cluster-based approach to increase its store network. Their aim is to achieve high store density in a densely-populated residential area within a target city. After which they look to expand in the surrounding areas within that city. The company offers pharmaceutical and wellness products like medicines, vitamins, medical devices, test kits. Other offerings include fast-moving consumer goods like home and personal care products, baby care products, sanitisers, soaps, and detergents, etc.
For financial years 2021, 2020 and 2019 their profit after tax margin was 2.06%, 0.06%, and 0.52%, respectively.
The Major competitors of the company include:
- Apollo Pharmacy
- Wellness Forever
- Zeno Health
- Emami Frank Ross
- Thulasi Pharmacy
Overview of the Industry
The healthcare sector in India primarily includes hospitals, pharmaceutical companies and pharmacy retail, diagnostic services, medical equipment and supplies, medical insurance, telemedicine companies and medical tourism. The total health expenditure comprised 3.5% of India’s GDP.
India’s pharmaceutical market was valued at ₹ 1,500 billion in the financial year 2020. It showed growth at a CAGR of approximately 10% in the last five years. The industry is expected to grow at a similar rate going forward.
As of the financial year 2020, the pharmacy retail industry was estimated to be worth approximately ₹ 1,725 billion and expected to grow at a CAGR of approximately 10% in the next five years.
According to the Technopak Report, India’s pharmacy retail market is expected to grow at a CAGR of approximately 11% between the financial year 2021 to 2025. It will take the total revenue of the industry from ₹1,811,250 million to ₹2,725,000 million.
Strengths of the Company
- Medplus is the second Largest Pharmacy retailer with more than 2,165 stores across India.
- The company has a well-established brand with a track record of providing good quality products for over 15 years.
- The first company with a high-density store network and provides an omnichannel platform to its customers.
- The technology-driven company operates on a large scale which is cost-efficient for their business.
- Well Qualified, Experienced and Entrepreneurial Board and Senior Management Team
Weaknesses of the Company
- Any Changes in prescription drug pricing and commercial terms could adversely affect the operations and financial performance of the company.
- The company is subject to extensive regulation governing the drug and dispensary markets. Non-compliance to these rules can impact the business
- There are outstanding legal proceedings involving the Company, its Subsidiaries, Promoters and their Directors.
- As the company is dependent on technology, it is subject to information technology systems impairment and cyber-attacks in the future.
- Any disruptions in the product supply chain could adversely impact their reputation and have an adverse effect on their business.
Grey Market Information
Shares of MedPlus Health Services traded at Rs 285 in the grey market on Thursday. The price band for the IPO is set between ₹780 to ₹796. The shares are trading at a premium of 35.08%.
Key IPO Information
The individual promoter of the company is Gangadi Madhukar Reddy and the corporate promoters include Agilemed Investments Private Limited and Lone Furrow Investments Private Limited.
The Book Running Lead Managers for the issue are Axis Capital Limited, Credit Suisse Securities (India) Private Limited, Edelweiss Financial Services Limited and Nomura Financial Advisory and Securities (India) Private Limited
KFin Technologies Private Limited has been appointed as the registrar to the issue.
|IPO Size||₹1,398.30 Cr|
|Fresh Issue||₹600.00 Cr|
|Offer for Sale (OFS)||₹798.30 Cr|
|Opening date||December 13, 2021|
|Closing date||December 15, 2021|
|Face Value||₹2 per equity share|
|Price Band||₹780 to ₹796 per equity share|
|Lot Size||18 Shares|
|Minimum Lot Size||1|
|Maximum Lot Size||13|
|Listing Date||December 23, 2021|
The Objective of the Issue
The company will utilise the Net Proceeds towards:
- Funding working capital requirements of their Material Subsidiary-Optival
- General corporate purposes
In this article, we covered the MedPlus Health IPO Review 2021. The Initial Public Offering opens on December 13th and closes on December 15th. Analyst opinion remains divided on the issue. Analysts from Axis capital remain Neutral on the subscription for the IPO. Axis capital remains neutral on the IPO.
For investors, it can be a good opportunity to look into the company and apply for the IPO after analysing the strengths and weaknesses of the company. Let us know what you think about the MedPlus Health IPO in the comments below? Happy Investing!