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Small & Midcap Mantra | Health is wealth: Nureca surges over 300% in 7 months, can retest Rs 2,000 again

Market analysts expect a breakout above Rs 2,000, and suggests that any dip in the stock price now is a buying opportunity.

September 17, 2021 / 01:12 PM IST
 
 
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Healthcare and wellness company Nureca, which falls under the smallcap category, has given surprise returns in nearly seven months, and has turned out to be the second-biggest gainer among listed IPOs in 2021, after Laxmi Organic Industries (up 360 percent from the IPO price since March 25).

Nureca has rallied 333 percent to close at Rs 1,732.60 on September 16, against the issue price of Rs 400. On market debut, the stock had settled with a massive gain of 66.66 percent at Rs 666.65 on the BSE on February 25 this year.

Drivers behind the rally

With the rising awareness on health amidst COVID-19, the Dr Trust-owned company has seen a strong demand for its healthcare products, including pulse oximeters and blood pressure monitors. As a result, the company has clocked healthy growth in its financials and reduced its debt in the same period. These are the key reasons that investors generally look at before investing in a company.

"We noticed a very strong growth due to the robust demand for healthcare products like pulse oximeters, blood pressure monitors, weighing machines, and nebulizers after COVID-19. The company is almost debt-free and has a good return on equity (ROE) track record," said Aprajita Saxena, Research Analyst, Trustline Securities.

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“We expect the growth momentum to continue in the coming quarters, backed by strong demand and launch of innovative, user-friendly products," she added.

Nureca, a B2C company engaged in the business of home healthcare and wellness products, clocked a healthy profit of Rs 46.4 crore in fiscal FY21 against Rs 6.4 crore in FY20. In the same period, operating revenue grew at a CAGR of 120 percent to Rs 213.5 crore in FY21 from FY18. Its debt-equity ratio is zero, as of FY21, against 0.6 in FY20.

Return ratios in the last financials also remained superior, with return on equity at 67 percent and return on capital employed at 52 percent in FY21, against 57 percent and 56 percent, respectively, in FY20.

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Can the stock cross Rs 2,000 again?

Experts largely expect the stock to hit the Rs 2,000-mark again in the short term. It had hit a record high of Rs 2,000.70 on August 4, 2021, while its closing on September 16 was Rs 1,732.60.

"The trend is looking positive. If it manages to sustain above Rs 1,500, the stock can retest its recent high of Rs 2,000," said Saxena.

"A major breakout is expected above Rs 2,000. The price action will give support for the next upmove. The immediate resistance is placed at Rs 2,200, followed by Rs 2,480. The key support levels are Rs 1,470 and Rs 1,350," she added.

Palak Kothari, Research Associate at Choice Broking, said the stock has been trading in the support zone of Rs 1,500-1,540, and any dip can be utilised as a buying opportunity.

The stock, he said, has been trading with the support of the 89-day moving average, which points to strength in northward direction. “The Stochastic indicator is also showing a positive crossover (K% is trading above D%), which adds strength for the counter."

At present, the stock is facing resistance at the Rs 1,800 level, he said. If the stock crosses that level, it can test the Rs 2,000 level. The downside support is at the Rs 1,500 level.

Nureca products in five categories

The company helps customers to monitor chronic ailments and other diseases, and to improve their lifestyles with its tools. The digital-friendly company sells products through online channel partners such as e-commerce players, distributors and retailers, and also through its own website,  drtrust.in.

Nureca has classified its products portfolio into five categories -- chronic device products, orthopedic products, mother and child products, nutrition supplements, and lifestyle products. It operates with three brands. Dr Trust provides medical devices and health monitoring solutions, Dr Physio products relieve chronic pain and enhance mobility, and Trumom sells infant and mother care products.

The home health market in India and neighbouring countries was pegged at Rs 20,757 crore in 2019 and it is expected to grow to Rs 38,920.7 crore by 2025 at a CAGR 11 percent.

Nureca had raised Rs 100 crore through its public issue in February.

Disclaimer: The views and investment tips 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 making any investment decision.
Sunil Shankar Matkar
first published: Sep 17, 2021 12:50 pm

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