Medplus Health makes a strong debut; lists at 31% premium to issue price

The stock listed at Rs 1,040, a 31 per cent premium to its issue price of Rs 796 per share on the National Stock Exchange.

Medplus Health Services (MHSL) made a strong debut on the bourses, as the shares were listed at Rs 1,040, a 31 per cent premium over its issue price of Rs 796 per share on the National Stock Exchange (NSE). The stock opened at Rs 1,015 on the BSE.

Post listing, the stock moved higher to Rs 1,119.80, a 41 per cent gain when compared to its issue price on the BSE. At 10:01 am; the stock traded at Rs 1,102, after hitting a low of Rs 1,015 in intra-day trades so far. On the NSE, the stock hit a high of Rs 1,118.80 and a low of Rs 1,040 so far. A combined 8 million equity shares changed hands at the counter.

The Rs 1,398 crore initial public offer (IPO) of MHSL had received robust response and was subscribed 52.59 times. The qualified institutional buyer’s category was subscribed 112 times. The non institutional investor’s category was subscribed 85 times, while the retail investors category was subscribed 5.24 times, data showed.

The objectives of the fresh issue are funding working capital requirements of material subsidiary, Optival, for Rs 467 crore of and remaining amount to be used for general corporate purposes.

MHSL is the second largest pharmacy retailer in India, in terms of revenue from operations for the financial year 2021 and number of stores as of March 31, 2021.

The company offers a wide range of products, including pharmaceutical and wellness products, including medicines, vitamins, medical devices, and test kits, and fast-moving consumer goods, such as home and personal care products, including toiletries, baby care products, soaps and detergents, and sanitizers.

The company is the first pharmacy retailer in India to offer an omni-channel platform. Through this omni-channel model, company seeks to deepen and extend its customer reach for each of its stores, enhance "convenience" as a core customer value proposition and retain customers.

Medplus with its clustered store presence is well suited to leverage on Omni-channel platform with a hyper local delivery model. “Further develop the Omni-channel platform with a hyperlocal delivery model with the aim to increase online sales revenue contribution and at the same time optimize profit margins. Enhance revenue and increase customer wallet share through continued investment in technology infrastructure and expansion into adjacent healthcare vertical, are among key triggers said ICICI Securities in IPO note.

However, one of MHSL’s Promoters, Lone Furrow Investments Private Limited, has pledged a portion of its shareholding with certain lenders under various loan and security agreements. Any exercise or enforcement of such pledge could dilute the shareholding of Lone Furrow Investments Private Limited, which may adversely affect the business and future prospects.

The insurance coverage may not be adequate to protect against all potential losses to which may be subject to and this may have a material adverse effect on MHSL’s business. The lenders have imposed certain restrictive conditions under MHSL’s financing arrangements. The changes in prescription drug pricing and commercial terms could adversely affect the operations and financial performance, are among key concerns said HDFC Securities in IPO note.