Nureca shares were locked in the upper circuit on their market debut on February 25, with the opening price exceeding analysts' expectations. The stock listed with a premium of 58.7 percent on the BSE against analysts' forecast of 10-20 percent premium. The stock opened at Rs 634.95 on the BSE against the issue price of Rs 400 a share.
It was locked in the upper circuit of 5 percent at Rs 666.65 against the opening price of Rs 634.95 in the early trade and the price was hovering around the same level in the afternoon as well. It has gained 66.66 percent against the issue price and was trading with volume of 93,000 equity shares.
At the National Stock Exchange, too, Nureca was up 5 percent at Rs 645.75 from the opening price and gained 61.4 percent over the issue price, with a volume of 2.05 lakh shares.
Nureca is a B2C vertical and engaged in the business of home healthcare and wellness products. The company sells its products through online channel partners such as e-commerce players, distributors and retailers, and also sells products through its own website drtrust.in and third party e-commerce platforms, distributors and retailers.
The company raised Rs 100 crore through its public issue during February 15-17 and the net issue proceeds (Rs 75 crore) will be utilised for incremental working capital requirements.
Positive market conditions backed by FII inflow, good response to the IPO and expectations of growth in the home health market could the reasons for the sharp rise in the Nureca shares, experts said. They advised profit- booking and said only long-term risk-taking investors should hold the stock.
"We advise investors to book partial profit on the listing day, if the stock will be available on a 20 percent premium. We recommend wait before making new buying on listing day and hold remaining stock for the long term as the home health market in India and neighbouring countries is expected to grow at a CAGR 11.0 percent by 2025, therefore the company's business will expected to have advantage from such growth," Astha Jain, Senior Research Analyst at Hem Securities told Moneycontrol.
"Also, the company’s partnership with Croma, India's first omni-channel electronics retailer from the Tata Group which will sell products from its Dr Trust and Dr Physio brands at 30 Croma stores across the country can benefit the company."
To expand its footprint, Nureca, in October 2019, joined hands with Croma. Its 95 percent of revenues come through digital channels (e-commerce).
"Nureca works on an asset-light business model which doesn't require to invest heavily on physical assets such as plant and machinery, land and property. The company's business model is scalable where company can expand its geographic presence, distribution reach andportfolio of products without incurring heavy cost," Ashta Jain said.
Allotted investors should opt for booking decent profits on the listing day as far as valuations are concerned, which are a bit overstretched, Prashanth Tapse, AVP Research at Mehta Equities, said.
"Only high-risk long-term investors may hold Nureca post-listing, while if you are a retail investor looking for a decent return on investment (ROI) better to book profits and look for better opportunities," Tapse said.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.