MedPlus Health IPO: All You Need To Know
The IPO will open on Dec. 13 and close on Dec. 15.
MedPlus Health Services Ltd. will sell shares at Rs 780-796 apiece in its initial public offering starting Monday, the first issue by a pharmacy retailer in India.
The IPO comprises a fresh issue of shares worth Rs 600 crore and an offer for sale of up to Rs 798.3 crore, the Hyderabad-based company said in its red herring prospectus. It is seeking a market value of Rs 9,496 crore at the upper end of the price band.
The selling shareholders make up 26% of the total stake prior to the public offer. Of this, PI Opportunities Fund-I, one of the initial investors in the company, is diluting 22%.
The IPO includes a reservation of equity shares worth Rs 5 crore for the company’s employees at a discount of Rs 78 apiece. Around 35% of the net offer is for retail, while 50% is for qualified institutional buyers, and 15% is for non-institutional buyers.
Issue opens on: Dec. 13.
Issue closes on: Dec. 15.
Issue size: Rs 1,398.3 crore.
Face value: Rs 2 apiece.
Lot size: 18 equity shares and multiples.
Listing on: BSE and NSE.
Lead managers: Axis Capital, Credit Suisse Securities (India), Edelweiss Financial Services, Nomura Financial Advisory.
Invest Rs 467.2 crore into material subsidiary Optival Health Solutions Pvt. for funding working capital requirements. This is estimated to be done over a period of three years.
General corporate purposes.
MedPlus is the nation’s second-largest pharmacy retailer by revenue from operations and number of stores, the prospectus said citing a Technopak report.
Founded in 2006, the company offers:
Pharmaceutical and wellness products, including medicines, vitamins, medical devices and test kits.
Fast-moving consumer goods such as home and personal care products, including toiletries, baby care products, soaps and detergents, and sanitisers.
As on Sept. 30, the company operated 2,326 stores in 261 cities across Telangana, Andhra Pradesh, Karnataka, Tamil Nadu, West Bengal, Maharashtra and Odisha.
Also, it has an integrated supply chain that handles end-to-end operations, including sourcing, inward stock, storage, distribution, logistics and reverse logistics. As of September, it had 18 warehouses in nine cities across seven states.
It has three manufacturing plants in Telangana, located at Jeedimetla, Moosapet and Pashamylaram.
At Jeedimetla, it manufactures a range of plastic products, including medicine trays, nebulisers, vaporisers, plastic bottles and caps, and other plastic products.
At Moosapet, it makes optical frames and spectacles.
At the Pashamylaram plant, liquid disinfectants, toiletries and cosmetics are manufactured.
MedPlus is involved in private label manufacturing and contract manufacturing business (since December 2020) as well as pathology laboratory testing. Wholesale and retail sales operations, including sales to franchisees, are carried out through its subsidiary, Optival Health Solutions.
The business operations of the group include:
Medplus Health manufactures and supplies pharmaceuticals to Optival Health Solutions.
Nova Sud Pharmaceuticals Pvt. is the holding company of all companies that are engaged in distribution of pharmaceutical, wellness and FMCG products to Optival Health Solutions. These include Sai Sridhar Pharma, Venkata Krishna Enterprises, Shri Banashankari Pharma, Deccan Medisales and Sidson Pharma Distributors.
Kalyani Meditimes Pvt., acquired in 2019, is the company through which the group owns and manages a software used to transcribe doctor’s prescriptions into e-prescriptions.
Wynclark Pharmaceuticals Pvt. and MHS Pharmaceuticals Pvt. are involved in contract manufacturing of private label pharmaceutical, wellness and FMCG products and supply of these products to Optival Health.
Clearancekart Pvt. does not perform any significant operations as on date.
Its highest revenue from operations comes from the retail segment which contributed 99.4% and 99.5% of its total revenue for the first half of FY22 and FY21, respectively.
Wholesale and pathology testing services are the other segments in which the company operates.
The company has reported profits across all segments in the first half of FY22, while it reported a loss in its pathology testing service in FY21.
The company had nil debt-to-equity ratio as on March 31, 2021.
MedPlus has no listed peers.
But, according to Technopak, Apollo Pharmacy, Wellness Forever, API Holdings, Tata 1mg and Netmeds are key competitors.
Quality and supply chain disruption risk owing to reliance on third-party manufacturers for inventory. This includes the company’s private label products manufactured by third parties on contract.
Dependence on third-party transportation service providers for delivery from warehouse to store.
Expansion in new markets may be adversely impacted due to changing laws, local preferences, different state tariffs and taxes, and political, economic and social instability.
Liability related to products sold causing any personal injury issues.
Certain company-related trademark applications are still pending approval. The company may face difficulties in protecting private labels in the event of a possible infringement during pendency of registration approval.
Failure to secure or renew leases of store spaces and vehicles on favourable terms.
Highly competitive industry. Also, the industry is undergoing a rapid consolidation and hence, there is a constant risk of development or provision of a wider product offering at competitive prices.
More than 75% of the company’s revenue from retail sales is from sale of branded pharmaceutical products. The manufacturing and sale of these products is tightly regulated by various laws and regulations. Any changes in legislation could impact business.
Outstanding legal cases against the company.
Delays or failure to obtain or renew required regulatory approvals for conducting business.
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