Incorporated on November 30, 2006, Medplus Health Services Ltd is the second-largest pharmacy retailer in India, in terms of revenue from operations for the financial year 2021 and the number of stores as of March 31, 2021.
It offers a wide range of products, which include pharmaceutical and wellness products (medicines, vitamins, medical devices and test kits), and fast-moving consumer goods (home and personal care products, including toiletries, baby care products, soaps and detergents, and sanitizers).
The company has decided to launch its initial public offering (IPO) on December 13.
Here are 10 key things to know before subscribing to the public issue:
1 IPO dates
The company is set to launch its IPO for subscription on December 13, and the offer will close on December 15.
2 Price band
The price band for the offer has been fixed at Rs 780–796 per equity share of face value Rs 2 each.
3 Offer details
The public issue consists of a fresh issuance of shares worth Rs 600 crore and an offer for sale (OFS) of shares worth Rs 798.29 crore by selling shareholders to mop up a total of Rs 1,398.29 crore.
Investor PI Opportunities Fund-I is going to sell shares worth Rs 623 crore and SS Pharma LLC will sell shares worth Rs 107 crore via the offer for sale.
Shore Pharma LLC, Natco Pharma, Time Cap Pharma Labs, A. Raghava Reddy, K. Prakurthi, Navdeep Patyal, Sangeeta Raju, R. Venkat Reddy, T.K. Kurien, Nithya Venkataramani, Atul Gupta, Manoj Jaiswal, Rahul Garg, Kollengode Ramanathan Lakshminarayana and Bijou Kurien are among others who are also going to offload shares via OFS.
The offer includes a reservation of shares worth Rs 5 crore for the company's employees. Eligible employees will get shares at a discount of Rs 78 per share to the final offer price.
Half of the net issue is reserved for qualified institutional buyers, 15 percent for non-institutional bidders and 35 percent for retail investors.
4 Objectives of the issue
The fresh issue proceeds will be utilised for working capital requirements of subsidiary Optival Health Solutions and general corporate purposes.
5 Lot size and investors’ reserved portion
Investors can bid for a minimum of 18 equity shares and in multiples of 18 shares thereafter. Retail investors can invest a minimum of Rs 14,328 for one lot and a maximum of Rs 1,86,264 for 13 lots.
6 Company profile and industry
The company was founded in 2006 by Gangadi Madhukar Reddy, who is also the managing director and chief executive officer. His vision was to set up a trusted pharmacy retail brand that offers genuine medicines and delivers better value to the customer by reducing inefficiencies in the supply chain using technology.
Medplus maintained a strong focus on scaling up the store network, from the initial 48 stores in Hyderabad to operating India’s second largest pharmacy retail network of over 2,000 stores across Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Odisha, West Bengal and Maharashtra, as on March 31, 2021.
It has a sizeable market share of the organised pharmacy retail market in these states with about 30 percent share in Chennai based on revenue from operations, 29 percent in Bengaluru, 30 percent in Hyderabad and 22 percent in Kolkata.
Medplus was the first pharmacy retailer in India to offer an omni-channel platform, in 2015, and it started actively focusing on online sales in fiscal 2020.
The company’s supply chain is supported by an algorithm-driven automated replenishment and stock picking system that is driven by a real-time inventory analytics platform. It generally procures its inventory directly from pharmaceutical companies.
7 Financials
Medplus clocked a profit of Rs 63.11 crore for FY21, up sharply from Rs 1.79 crore in FY20. Revenue during the same period increased to Rs 3,069.26 crore from Rs 2,870.6 crore.
Profit in the six-month period ended September 2021 stood at Rs 66.36 crore, rising from Rs 22.27 crore, and revenue rose to Rs 1,879.92 crore from Rs 1,462.55 crore in the same period of the previous year.
Net margins for FY21 stood at 2.06 percent compared to 0.06 percent in FY20. For the six months to September 30, 2021, the company posted a net margin of 3.53 percent.
The operating EBITDA (earnings before interest, tax, depreciation and amortisation) grew at a compound annual growth rate of 63.21 percent from Rs 65.73 crore in financial year 2019 to Rs 175.06 crore in FY21, and was Rs 107.85 crore in the six months ended September 30, 2021.
The operating return on capital employed for the financial years 2020 and 2021 and the six months ended September 30, 2021, was 19.87 percent, 26.08 percent and 13.40 percent, respectively.
8 Key risks
The company faces risks from government regulation on price caps of a larger range of therapeutics which may impact the business. Also, a portion of promoter’s shareholding is pledged.
It also faces increased competition from online pharmacies. Besides, some of the new stores have faced a delay in break-even at the EBITDA level. This trend can impact the working capital requirements and cash flows for the business.
9 Promoters & management
Gangadi Madhukar Reddy, Agilemed Investments Pvt Ltd. and Lone Furrow Investments Pvt Ltd are the promoters of the company.
Reddy is the managing director and chief executive officer of the company since inception in 2006.
Anish Kumar Saraf and Atul Gupta are the non-executive directors. Murali Sivaraman, Madhavan Ganesan and Hiroo Mirchandani are the non-executive independent directors.
Key managerial personnel
Cherukupalli Bhaskar Reddy is the chief operating officer, outlet operations, and Surendranath Mantena is the chief operating officer, MedPlus Mart.
Hemanth Kundavaram is the chief financial officer and Parag Jain is the company secretary and compliance officer.
10 GMP, listing and allotment date
The public issue commands a premium of Rs 300 per share in the grey market as per IPO watch.
The allotment of shares will get finalised by December 20 and unsuccessful investors will get refunds by December 21. Successful investors will get shares in their demat accounts by December 22.
Medplus shares will list on the BSE and National Stock Exchange on December 23.
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