Medplus Health IPO – Should you Subscribe?

MedPlus Health Services IPO (Medplus IPO) - Review, issue details, price, dates and AnalysisMedplus Health IPO (Medplus Health Services Limited IPO) Details

Hyderabad based Medplus is coming up with an IPO that would open for subscription on 13th December 2021. Medplus Health Services Limited second largest pharmacy retailer in India. Company has strong revenue growth in the last 3.5 years. Its margins too improved during FY19 to FY21. Should you invest in Medplus Health IPO? This article would provide IPO details, Dates, GMP, Listing Date and conclusion on whether it is good or bad for investment.

Also Read: Complete Review of Shriram Properties IPO

About Medplus Health Services Limited

Company is the second largest pharmacy retailer in India in terms of revenue for FY21 and in terms of number of stores as of the end of Mar-21.

Company offers a wide range of products which includes

i) pharmaceutical and wellness products, including medicines, vitamins, medical devices and test kits

ii) fast moving consumer goods such as home and personal care products, including toiletries, baby care products, soaps/detergents and sanitizers

Company is founded in 2006 by Gangadi Madhukar Reddy (MD and CEO).

Company has over 2,000 stores distributed across Telangana, Andhra Pradesh, Tamilnadu, Karnataka, Odisha, west Bengal and Maharastra.

Company has organised pharmacy retail market based on revenue from operations in Chennai, Bangalore, Hyderabad and Kolkata stood at 30%, 29%, 30% and 22% respectively.

Medplus Health IPO details and Price

IPO Opening Date 13-Dec-21
IPO Closing Date 15-Dec-21
Issue Type Book Built Issue IPO
Face Value Rs 2 per equity share
IPO Price band Rs 780 to Rs 796 per equity share
Lot Size 18 Shares
Min Order Quantity 18 Shares
Listing at BSE and NSE
Total Issue Size Rs.1398.3 Crores
    Fresh issue     Rs.600 Crores
   OFS     Rs.798.3 Crores
Employee Discount Rs.78 Per Share

Medplus IPO DRHP

What are the strengths of Medplus Health Services Limited?

1) Company is India’s Second Largest Pharmacy retailer

2) It has established Brand and Value Proposition to Customers

3) Company has a successful Track Record of Expansion Using a Distinct Cluster-based and Replicable Store Unit Expansion Approach

4) It has a High Density Store Network Enhancing Omni-channel Proposition

5) Company with Lean Cost Structure and Technology Driven Operations

6) Well Qualified, Experienced and Entrepreneurial Board and Senior Management Team

What are the Objects of the IPO Offer?

Medplus Health IPO Size is Rs 1,398.3 Crores and below are the objects of the IPO:

1) Offer for Sale (OFS) Rs 798.3 Crores:  Under OFS, selling shareholders would sell their shares and company would not get any money from this IPO proceeds.

2) Fresh issue of Rs 600 Crores:  Fresh issue would be done towards the following purposes:

i) Funding working capital requirement of subsidiary, Optival and

ii) General corporate purposes.

Who are the promoters of Medplus Health Services Limited?

Gangadi Madhukar Reddy, Lone Furrow Investments Pvt Ltd, and Agilemed Investments Pvt Ltd are the promoters of the company.

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How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years and 6 months.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY19 FY20 FY21 Sep-21
Total Assets 9,587.1 13,487.0 15,656.6 17,464.9
Revenues 22,849.4 28,878.9 30,908.1 18,909.0
Profit After Tax 119.2 17.9 631.1 663.7
Profit % 0.52% 0.06% 2.04% 3.51%

Why to invest in Medplus Health IPO?

Here are the positive factors in this company.

1) Company is the second largest retailer pharmacy chains in India.

2) It has a strong brand name and over 2,000 stores in Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Odisha, West Bengal, and Maharashtra.

3) It is the first pharmacy retailer to provide an Omni Channel platform to customer.

4) Company has strong revenue growth in the last 3.5 years. Its revenues for FY19, FY20 and FY21 are at Rs 2,284.9 Crores, 2,887.8 Crores and Rs 3,090.8 Crores respectively.

5) Company’s margins have improved significantly in the last 3.5 years. It was generating profits of 0.5% for FY19 which improved to 2.04% in FY21. Even for 6 months ending Sep-21 it generated 3.5% profits on the revenue.

Risk Factors of investing in Medplus Health IPO

1) Company IPO objects contain Rs 798 Crores towards Offer for sale (OFS) where the money would go to selling shareholders and company would not get anything.

2) The extent to which Covid pandemic may affect its business and operations in the future is uncertain and cannot be predicted.

3) Noncompliance with and the changes in drug and dispensary laws and other regulation may adversely impact its business.

4) There are outstanding legal proceedings involving company, subsidiaries, Promoters and Directors. Any adverse outcome in any of these proceedings may adversely impact business.

5) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.

FAQs – Medplus IPO

What is Medplus IPO Rating?

Company do not require to get IPO rating. Currently, Medplus Health Credit Ratings are not available on any of the credit rating agency portals.

What is the minimum amount to subscribe to this IPO?

Investors need to apply for 18 shares at minimum lower price band of Rs 780 per share = Rs 14,040. Similarly, the minimum amount to be applied on upper price band would be Rs 18 x 796= Rs 14,328.

Is it good or bad for investment?

Company has generated strong revenue growth in the last 3.5 years. While it was generating thin margins in FY19 and FY20, these have improved in FY21 and 6 months ending Sep-21.

What is Medplus Health IPO GMP today?

GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about the IPO price as it is unorganized market. Medplus Health IPO GMP is not available as there are no trades happening in offline market now.

Medplus Health Services Limited IPO Valuation

The Medplus Health IPO price band is Rs 780 to Rs 796 per share.

If we consider last 3 years weighted average EPS of Rs 3.19 and the upper price band of Rs 796, P/E works out to be 250x.

If we take FY2021 EPS of Rs 5.88 and the upper price band of Rs 796, P/E works out to be 135x.

Means company is asking IPO price of Rs 796 in the P/E ratio of 135x to 250x.

There are no listed peers to check whether the issue price for comparison. However, the P/E of 135x to 250x seems to be highly priced (Nifty Pharma P/E is at 31x as an example though not comparable).

Medplus Health IPO dates for subscription, Allotment and Listing

Offer Open 13-Dec-21
Offer close 15-Dec-21
Finalization of Allotment 20-Dec-21
Initiation of Refunds 21-Dec-21
Credit to Demat Account 22-Dec-21
IPO Shares Listing Date 23-Dec-21

Also Read: MapmyIndia IPO – Is this good or bad?

Medplus Health IPO Review and Analysis

After going through all these pointers, you might be wondering whether Medplus Health IPO is good or bad for investment?

Medplus Health Services Limited is a second largest pharmacy retailer in India.

Company has generated strong revenue growth in the last 3.5 years.

While company margins were thin for FY19 and FY20, these have improved in FY21 and 6 months ending Sep-21.

While there are no listed peers for comparison, the issue price seems to be overpriced (considering P/E in general).

Stock markets are volatile and taking corrections now and then, hence investors should be little cautious about investing in IPOs.

Considering all these positive and risk factors indicated above, investors can invest in this IPO. If such company shares are available at discounted prices post listing, investors can add some more and invest for medium to long term perspective.

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Suresh KP

8 comments

  • Ajit Pardeshi

    Dear Sir, margins are very thin to justify this price. This is my POV only. You also seem to take the same stand but are slightly inclined towards subscription. I will give it a pass I think.

  • Raj A

    Sir, u r recommending this company ipo to apply even its high valuation and high P/E.
    I am not finding any points which justifies their such high price ask. Please advise. Thanks in advance

    • Raj, It has good financial track record. There are no listed peers for comparison of P/E. Due to lack of any other info, I indicated that in general the price seems to be overpriced. Yes, like I always indicated, this post as pros and cons and finally, its my personal view given at end. It need not be aligned to lakhs or millions of IPO investors. You can take final call whether to invest or avoid

  • Sanjay Mukherjee

    Sastasundar is a listed peer

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