Medplus has filed its initial public offering to raise a total of Rs 1,398.29 crore through fresh issuance of 600 crore shares and a sale of 798.29 crore shares by selling shareholders.
Based on revenue from operations for 2021 and the number of stores as of March 31, 2021, Medplus Health Services Ltd was founded on November 30, 2006.
The company offers a variety of products from the company, including drug and wellness products (medicines, vitamins, medical devices, and test kits), as well as fast-moving consumer goods (home and personal care products, such as toiletries, baby care products, soaps and detergents, and hand sanitisers).
On December 13, the medplus will launch its initial public offering (IPO).
Before subscribing to the public issue, here are ten key things to know:
- IPO dates
A subscription period will begin on December 13 and end on December 15, when the company will launch its IPO.
- Price band
An offering price band of Rs 780-796 per equity share of face value Rs 2 has been set.
- Offer details
To raise a total of Rs 1,398.29 crore, the company will issue new shares worth Rs 600 crore and make an offer for sale (OFS) of shares worth Rs 798.29 crore to existing shareholders.
Shares worth Rs 623 crore will be sold by Investor PI Opportunities Fund-I, and shares worth Rs 107 crore will be sold by SS Pharma LLC.
Employees of the company are entitled to receive shares worth Rs 5 crore as part of the offer. A discount of Rs 78 per share will be offered to eligible employees as part of the final offer price.
The net proceeds will be divided among qualified institutional buyers (half), non-institutional bidders will receive 15%, and retail investors will receive 35%.
- Objectives of the issue
As well as working capital requirements of subsidiary Optical Health Solutions, the proceeds from the offering will be used in general corporate operations.
- Lot size and investors’ reserved portion
Shares can be bought in multiples of 18 shares for a minimum bid of 18 equity shares. Retail investors can invest for a minimum investment of Rs 14,328 and a maximum investment of Rs 1,86,264 for 13 lots.
Profiles of companies and industries
Managing director and chief executive officer Gangadi Madhukar Reddy founded the company in 2006. Using technology to reduce inefficiencies in the supply chain, he envisioned setting up a trustworthy pharmacy brand that offered authentic medications and provided better value to its customers.
On March 31, 2021, Medplus will operate with over 2,000 pharmacies in Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Odisha, West Bengal, and Maharashtra the second-largest pharmacy chain in India.
In these states, the company accounts for a substantial share of the organised pharmacy retail market by revenue from operations, with about 30 per cent in Chennai, 29 per cent in Bengaluru, 30 per cent in Hyderabad and 22 per cent in Kolkata.
The pharmacy retailer, Medplus, offered the first omnichannel platform in India in 2015 and began actively marketing online sales in fiscal 2020.
Automated replenishment and stock picking are supported by a real-time inventory analytics platform driving the company’s supply chain. Inventory is generally procured directly from pharmaceutical manufacturers.
Profits for Medplus increased sharply from FY20 when a profit of Rs 1.79 crore was recorded. Revenue increased from Rs 2,870.6 crore to Rs 3,069.26 crore during the same period.
As of September 2021, profit was Rs 66.36 crore, up from Rs 22.27 crore in the same period of the previous year, and revenue was Rs 1,879.92 crore, up from Rs 1,462.55 crore.
In FY20, net margins were 0.06 per cent, while in FY21, they were 2.06 per cent. The company reported a 3.53 per cent net margin for the six months ended September 30, 2021.
The company’s operating EBITDA came in at Rs 107.85 crore in six months ended September 30, 2021, up from Rs 65.73 crore in the financial year 2019 and Rs 175.06 crore in FY21, a compound annual growth rate of 63.21 per cent.
As of September 30, 2021, the operating return on capital employed was 19.87 per cent, 26.08 per cent, and 13.40 per cent, respectively, for financial years 2020 and 2021.
- Key risks
A more extensive range of therapeutics may be impacted by government price caps, which may negatively affect the company’s business. The promoter is also pledging a portion of his shares.
Additionally, online pharmacies are becoming more competitive. The EBITDA of some of the new stores has been delayed for the past few years. As a result, the business’s cash flow and working capital requirements are affected.
- Promoters & management
Lone Furrow Investments Pvt Ltd, Agilemed Investments Pvt Ltd, and Gangadi Madhukar Reddy are the company’s promoters.
Since founding the company in 2006, Reddy has served as managing director and CEO.
A non-executive director is Anish Kumar Saraf, and a non-executive director is Atul Gupta. Non-executive independent directors Murali Sivaraman, Madhavan Ganesan and Hiroo Mirchandani, are on the board.
- Personnel key to management
The CEO of outlet operations is Cherukupalli Bhaskar Reddy, while the CEO of MedPlus Mart is Surendranath Mantena.
Company secretary Parag Jain is in charge of compliance, and Hemanth Kundavaram is the chief financial officer.
- GMP, listing and allotment date
According to IPO watch, the grey market premium on the public issue is Rs 300 per share.
By December 20, the allotment of shares will be complete, and unsuccessful investors will make the refunds. On December 22, the claims will be sent to successful investors’ Demat accounts.
The shares of Medplus will make their debut on December 23 on the BSE and NSE.