IPO Note - Medplus Health Services Ltd By Religare Broking Ltd
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Medplus Health Services Ltd.
About the Company
Medplus Health Services Ltd is the second-largest pharmacy retailer in India, in terms of revenue from operations and number of stores as of FY21. They offer a wide range of products, including (i) pharmaceutical and wellness products including medicines, vitamins, medical devices and test kits, and (ii) fast-moving consumer goods such as home and personal care products including toiletries, baby care products, soaps and detergents, and sanitizers. They operate a retail network of over 2,326 stores distributed across cities wherein they have 546 stores in Karnataka, 475 stores in Tamil Nadu, 474 stores in Telangana, 297 stores in Andhra Pradesh, 224 stores in West Bengal, 221 stores in Maharashtra and 89 stores in Odisha. As of March 31, 2021, they ranked 1st in Chennai and Bangalore and 2nd in Hyderabad and Kolkata, in terms of the number of stores. As of September 30, 2021, they have a primary warehouse in each of Bangalore, Chennai, Hyderabad, Vijayawada, Kolkata, Pune, Bhubaneswar, Mumbai and Nagpur.
Objects of the Issue
* Funding working capital requirement of the subsidiary, Optival;
* General corporate purposes;
Valuation
The pharmacy retail industry is expected to grow at a CAGR of 10% to reach Rs. 1,725bn in the next 5 years. The growth will be driven by rising healthcare expenditure, the rising demand for OTC and prescription drugs, wellness products and private label products. The organized share of India’s pharmacy retail market, in terms of revenue, increased from ~5% in FY15 to 11% in FY21 and it is further expected to grow at a CAGR of ~27% between FY21-25 and reach Rs 535,000mn in terms of revenue primarily through a combination of structural growth in the underlying market and gaining market share from the unorganized pharmacy retailers. We believe organized players like Medplus will stand to benefit from industry growth prospects.
Medplus is well-positioned to benefit from a fast-growing Indian e-commerce pharmacy retail market given their wide product offering, genuine and good quality pharmaceutical products offering, existing online operations and last-mile delivery capabilities. Further, the company has a large scale of operations and offers competitive pricing to their customers which will continue to drive market share. Going forward, the company intends to grow its Omni-channel platform with a hyper-local delivery model. Also, they plan to strengthen the market reach by entering new geographies. On the financial front, the company’s performance seems decent. From a long term growth perspective, we have a positive view on Medplus.
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