Medplus Health allots share worth Rs 418 crore from anchor investors

Pharmacy chain Medplus Health Services on Friday allotted shares worth Rs 418 crore to three dozen investors in the anchor category. About 5.25 million shares were allotted at Rs 796 apiece. Some of those who got allotment include Abu Dhabi Investment Authority, Blackrock, Fidelity and Nomura. Seven mutual funds also applied through a total of 18 schemes.

The price band for Medplus’ Rs 1,398-crore IPO is Rs 780-796 per share. The share sale opens on December 13 and closes on December 15. Through the IPO, the Warburg Pincus-backed company is planning to raise Rs 600 crore by issuing fresh equity shares. The rest Rs 798 crore is an offer for sale (OFS). Among the selling shareholders are Premji Invest’s PI Opportunities Fund, which is looking to offload shares worth Rs 623 crore and Natco Pharma which is selling shares worth Rs 10 crore.

"We believe Medplus will trade at a higher multiple as it is a pure-play omnichannel company with scarcity premium and high growth rates. Medplus EBITDA  has grown at 48 per cent CAGR over FY19-22. Annualizing H1FY22 numbers, at the upper end of the price band, the company will trade at 2.4x EV/sales and 44x EV/EBITDA versus 3x EV/sales and 35x EV/EBIDTA (based on our parameter) to Apollo’s offline pharmacy business on a one-year forward basis,” said Param Desi Research Analyst at Prabhudas Lilladher.

Medplus Health is the country’s second largest pharmacy retailer in terms of revenues for the financial year 2020-21 and also in terms of number of stores. The company operates over 2,000 stores across seven states, which include Tamil Nadu, Andhra Pradesh, Telangana and Karnataka.

The company medicines, wellness products, medical devices, and fast-moving consumer goods. In FY21, the company had reported revenues from operations of Rs 3,048 crore and net profit of Rs 62.7 crore.