MedPlus Health Services IPO Review

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MedPlus IPO
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KNOW THE COMPANY:

MedPlus Health Services was established in 2006 by Gangadi Madhukar Reddy. The company offers a wide range of products in pharma, healthcare and wellbeing items. Their portfolio incorporates clinical gear, medicines, test packs, nutrients alongside FMCG items. The FMCG items include child care items, sanitisers, cleansers, toiletries, and many more. MedPlus being the pharma retailing chain is the first to offer an omnichannel deals network. The core operation of the company is of retail business. Gangadi Madhukar Reddy is currently serving as the Managing Director and the CEO of the Company. Checkout Medplus Health Services IPO price, size, and much more.

The focus of the company is on making itself a trusted pharmacy retail brand. Their aim is to provides genuine medicines. They also focus on providing stronger value to customers by reducing supply chain inefficiencies through technology.

OBJECTS OF THE IPO ISSUE:


• Prepayment of all the loans of the Company. It will be availed on a consolidated basis.
• To meet corporate targets.
• To fund the working capital requirement.

BASIS OF THE IPO OFFER:


• The second-largest pharmacy retailer in India.
• The company has an Established Brand and Value Proposition to Customers.
• Focus on the Development in business operation. It will be done by utilizing a Distinct Cluster-based and Replicable Retail outlet Unit Expansion Strategy.
• The Omni-channel proposition been upgraded with a high-density supply chain.
• The company have Technology-driven processes and a lean pricing framework system.
• MedPlus has a Board of Directors and senior management team which is very capable, highly innovative, educated and well qualified.

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MedPlus IPO DETAILS:


Pharmacy retail outlet MedPlus filed its DRHP to float its IPO in the market. Currently, the firm is waiting for the approval of SEBI to launch an IPO of Rs. 1639 crores. The IPO Offer is divided in two segments. It comprises fresh issue equity shares of Rs. 600 crores. The IPO offer also includes an OFS of up to Rs. 1038.71 crores.
The OFS will comprise of:

Equity shares by PI Opportunities Fund – I
Rs.500 crores
Equity shares by Lone Furrow Investments
Rs.450 crores

Equity shares from various stakeholders Rs.88.71 lakh

The funds that will be raised by the company from the IPO will be used to fund the working capital requirements of MedPlus’s subsidiary. The subsidiary of the MedPlus is Optival Health Services. Also, it plans to meet the general corporate purpose from proceedings of the IPO.

IPO Opening Date October 2021
IPO Closing Date October 2021
Issue Type Book Building Type
Face Value Rs.2 / Equity share
IPO Price
Market Lot
Min Order Quantity
Listing At BSE, NSE
Issue Size Rs.1639 Crores
Fresh Issue Rs. 600 Crores
Offer for Sale Rs. 1039 Crores

Basis of Allotment Date October 2021
Initiation of Refunds October 2021
Credit of Shares to Demat Account October 2021
IPO Listing Date October 2021

Basis of the Allotment % Of IPO Offer
Qualified Institutional Buyer 50
Non-Institutional Investor 15
Retail 35

GROWTH ASPECTS OF MEDPLUS IPO:


• Focus of the company in Increment of the brand value in the cities where the Company operates by carrying out designated showcasing and publicizing campaigns.
• The Company’s focus is to grow its market share in the overall industry by strengthening its business in cities and developing in rural areas.
• The Cost investment funds of the company will be acknowledged because of the working influence. It is been acquired in their production network and inventory administration.
• The Company has a very organized and thorough shop opening cycle set up. It also has specialized operations and business advancement staff at the nearby city and state levels to assess and approve new store openings.
• MedPlus is India’s first pharmacy store to offer an omni-channel stage. Since 2015, the customers have had the alternative of visiting their retail stores or getting their items online using their site and Mobile Application.
• The Company is focusing on increasing its customer base in all its stores.
• MedPlus is also working on retaining its client’s ecosystems.
• In the financial year 2020, they began focusing more heavily on digital sales. The Revenue obtained from their digital sales channel has increased over the previous two years. The Digital sales was 8.98% and 6.99% of their overall income. The digital sale played a key part in their business operations in financial years 2021 and 2020, respectively.
• The potential within the Indian Healthcare Sector is also another boost to the company. The market of healthcare is predicted to reach $372 billion by 2022. It will contribute 3% to India’s GDP by 2022.
• The Company is also focusing on developing its Omni-channel Platform with a Hyperlocal Delivery Model.
• The company is also working to increase their Revenue. The company is also focusing on the expansion of Customer Wallet Share. For this they used a strategy of Continued Investment in Technology Infrastructure along with Expansion into Adjacent Healthcare Vertical.
• It is also focusing on Increasing Operating Efficiency and Enhance Supply Chain Management to Drive Profitability.

THREATS AND WEAKNESSES OF MEDPLUS IPO:


• The effect of COVID-19 on their business in the coming years is obscure and can’t be estimated.
• Changes in doctor prescribed medication cost and business terms might contrarily affect their business.
• The organization, subsidiaries, promoters, and directors are completely associated with progressing legal procedures. Any negative decision in any of these processes might hurt their Company.
• The Company’s financial stability might be hurt if it didn’t effectively manage inventory and forecast demand.
• They might be defenseless against cyber-attacks and information technology system failures.
• The Company is exposed to the perils that accompany venturing into new business sectors.
• Representative bad conduct or mistakes that are hard to find may cause harm to the business.
• The Company’s business model is such that it relies on the use of physician-recommended prescriptions, and their brand value and non-exclusive medications might detrimentally affect their margins and sales, leading to the loss in the business.
• The company have engaged in related party transactions in the past and may do so again in the future.
• The company has a negative impact due to their financial agreements which states that their lenders have put some restrictive limitations on them.

Basic and Diluted Earnings Per Share
Financial Period Basic EPS (in INR) Diluted EPS (in INR)
Financial Year 2021 6.13 5.88
Financial Year 2020 0.21 0.20
Financial Year 2019 1.15 1.10

Particulars For the year/period ended ( in Cr.)
31-Mar-21 31-Mar-20 31-Mar-19
Total Assets 1,565.66 1,348.70 958.71
Total Revenue 3,090.81 2,887.89 2,284.94
Profit After Tax 63.11 1.79 11.92

• MedPlus Health Services is a major player in this business vertical, operating on strong financials.
• In March 2021, MedPlus had total assets of worth Rs. 5484.24 million. It also reported an increase in its revenue from Rs. Six hundred thirty million in FY2019-20 to Rs.704 million in FY2020-21.
• Recently MedPlus received round of funding from various institutions. The funding was about $13.7 million in February 2021.
• The Company started from 48 stores. Mostly all the stores were in Hyderabad at its inception. Currently, it is India’s second-largest pharmacy retail network. The Company has an alliance with over 2,000 stores. These stores are spread across various states of India.
• The major operation of their business and the revenue comes from Chennai, Bangalore, Hyderabad, and Kolkata. In FY21, these cities contributed around 88% of their income.
• The Company is focusing on scaling up its number of store operations. In Hyderabad and Kolkata, their stores increased from 141 to 309 in FY21. In Bangalore, the no of stores under their business operation increased from 110 to 331. They also increased their store operation in Maharashtra and Odisha.
• MedPlus was the second-largest pharmacy retailer in India. The parameters of the consideration are revenue from operations and the number of stores as in FY21.

PARAMETER FY21 FY20 YoY %
Core EBITDA Margin (%) 7.06 4.66 51.59
EBIT Margin (%) 4.89 2.65 84.15
Pre-Tax Margin (%) 3.10 1.02 202.95
PAT Margin (%) 2.06 0.06 3190.19
Cash Profit Margin (%) 4.93 2.67 84.83
ROA (%) 4.45 0.18 2319.01
ROE (%) 19.38 0.59 3184.72
ROCE (%) 20.01 14.34 39.58
Asset Turnover (x) 2.16 2.94 -26.48

Net Sales Growth (%) 6.92 26.31 -73.69
Core EBITDA Growth (%) 57.80 126.54 -54.33
EBIT Growth (%) 96.89 44.56 117.42
PAT Growth (%) 3417.89 -91.42 3838.81
EPS Growth (%) 1423.37 -91.42 1657.02

PROMOTERS:


The promoters of the company are:
• Gangadi Madhukar Reddy
• Agilemed Investments Private Limited
• Lone Furrow Investments Private Limited

Pre-Issue Share Holding 96.52%
Post Issue Share Holding

CONTACT DETAILS:


MedPlus Health Services Limited
707, 7th Floor, 5-9-13, Taramandal Commercial Complex,
Saifabad, Hyderabad 500 004, Telangana, India
Tel: +91 040 6724 6724
E-mail: cs@medplusindia.com
Website: www.medplusindia.com

REGISTRAR:


KFin Technologies Private Limited
Selenium, Tower B, Plot No- 31 and 32,
Financial District, Nanakramguda,
Serilingampally, Hyderabad, Rangareedi 500 032,
Telangana, India
Tel: +91 40 6716 2222/ 180034 54001
E-mail: medplus.ipo@kfintech.com
Website: www.kfintech.com

LEAD MANAGER(S) OF MEDPLUS IPO:


• Credit Suisse Securities (India) Private Limited
• Axis Capital Limited
• Edelweiss Financial Services Limited
• Nomura Financial Advisory and Securities (India) Private Limited

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